Panasonic | 2016

On June 24th, 2016, Etica Sgr voted for the first time at Panasonic’s annual shareholders’ meeting. Panasonic is a Japanese manufacturer of electronics and appliances for a wide range of consumer, business and industrial uses.

The meeting was held in order to elect the Board of Directors: in that regard, the company proposed the re-election of sixteen members who were already on the Board in 2015, in addition to the election of one new board member as an “independent outsider”. Etica Sgr had no objections to the election of 12 members and thus voted in their favor, while voting against the appointment of five directors. Specifically, Etica Sgr voted against the election of Mr. Nagae, Shusaku (Chairman), Mr. Matsushita, Masayuki (a descendant of the founder and member of the Board of Directors for 30 years), and Mr. Tsuga, Kazuhiro (President), because they did not put the renewal of the company’s poison pill strategy to a shareholder vote. A poison pill is a defensive tactic used by a company in order to prevent a hostile takeover; Etica Sgr holds a negative opinion of such a tactic, as it could encourage mediocre management of the company as well as discourage takeover bids on the part of corporations that could actually help increase the company’s value. Between 2006 and 2009, there were several cases in Japan in which a poison pill was used in this way; but since then, the majority of Japanese companies that had a poison pill plan without shareholder approval either put it to a vote or eliminated it altogether. Today there are very few companies that have a plan without shareholder approval, and even those cases are out of the ordinary: for example, companies with a high number of independent board members who expressed their opinion in favor of such a plan.

Etica Sgr also voted against the election of Mr. Oku, Masayuki and Mr. Tsutsui, Yoshinobu, because the company presented them as “Independent Outsiders”, yet they did not prove to be entirely independent. Indeed, Mr. Oku, Masayuki is Chairman of the Sumitomo Mitsui Financial Group, the holding company that is Panasonic Corporation’s main lender; and Mr. Tsutsui, Yoshinobu is President of Nippon Life Insurance, which is one of Panasonic’s main shareholders. On the other hand, Etica Sgr approved the election of Ms. Ota, Hiroko, who is the only woman on the Board – in its comments on the vote, Etica Sgr noted that the presence of women on boards of administration in Japanese companies is a major engagement issue at the moment, especially in light of improvements introduced by the Japanese Code of Corporate Governance. Furthermore, Etica Sgr voted in favor or the election of two auditors.

Although Etica Sgr was pleased with Panasonic’s proposal to change the total maximum pay for Outside Directors in a way that does not alter the Board’s total remuneration, it decided to abstain from voting on this agenda item because it included a change to the exercise period of stock options that did not conform to paragraph 1.6 of Etica Sgr’s Guidelines on Active Shareholder Engagement. Indeed, the stock option plan does not include information on the performance criteria that lead to the maturity of the options.

Lastly, in keeping with the reasoning behind its votes, Etica Sgr has made an effort to engage in a dialogue with Panasonic on the issues of independence and the presence of women on the Board of Directors. There are also other engagement issues that Etica Sgr plans on raising with Panasonic, such as product innovation (car batteries, Internet of Things), carbon dioxide emissions, labor rights, supply chain management (especially as concerns conflict minerals), product safety, and issues related to fiscal transparency.

Engagement Foreign companies
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