Kao Corporation has issued a detailed response to recent claims made by Oasis Management Company Ltd. (“Oasis Management”), an investment management firm and shareholder in the company, regarding the selection process for Director candidates at Kao’s 119th Ordinary General Meeting of Shareholders. Oasis Management had criticized Kao’s governance practices, labeling its offer to interview the candidates as “clearly disingenuous” and questioning its approach to director nominations.
Kao’s Commitment to Long-Term Shareholder Value
Kao emphasized its steadfast commitment to increasing shareholder value from a long-term perspective, rooted in its business strategies. The company reiterated its openness to engaging constructively with stakeholders, including shareholders like Oasis Management. Kao views diverse perspectives as valuable in addressing business challenges and ensuring robust governance practices.
Transparent and Rigorous Selection Process
Kao underscored that its process for selecting Director and Auditor candidates is thorough, transparent, and driven by long-term strategic goals. This year, the Committee for Examination of Nominees for Directors and Audit & Supervisory Board Members undertook an exhaustive six-month evaluation process to determine the optimal composition of the Board. Importantly, Kao noted that this decision-making process was concluded before Oasis Management submitted its own list of proposed candidates.
The timing of the announcement, set for December 2nd, was intended to coincide with key corporate disclosures, including the retirement of David Muenz from his Executive Officer role at the end of December. While Muenz will step down as an Executive Officer, he will continue to serve as a Director until the General Meeting of Shareholders in March, ensuring continuity and a smooth transition.
Addressing Specific Allegations by Oasis Management
Kao disputed Oasis Management’s assertion that the company had failed to be transparent in its governance practices. The company stated that its Director nomination process, as governed by the Committee for Examination of Nominees, was clearly communicated to Oasis. Furthermore, Kao has been conducting appropriate screenings of the candidates proposed by Oasis in accordance with established procedures, a fact that has been directly communicated to the investment firm.
Despite this, Oasis Management accused Kao of taking “an approach to director nominations that falls well short of the due process expected from public companies” and claimed that the company’s offer to interview candidates was “clearly disingenuous.” Kao strongly refuted these allegations, emphasizing the inaccuracies in such statements.
Delegation of Authority and Oversight
Kao also addressed Oasis Management’s claim that the company had “abandoned its oversight function” by delegating significant authority to management. The company clarified that its governance approach adheres to Japan’s Companies Act and involves delegating authority within legally permissible bounds. This strategy is paired with strengthened supervisory functions to ensure agile and decisive decision-making. Kao emphasized that no changes to its governance structure have occurred as part of this process.
Commitment to Transparent Governance and Strategic Growth
In its response, Kao reaffirmed its dedication to highly transparent and effective governance practices, as well as its commitment to implementing its “K27 strategy,” which aims to enhance corporate value and shareholder returns. The company reiterated its resolve to maintain a Board of Directors that aligns with its strategic goals while addressing the expectations of its shareholders and stakeholders.
