Milk of culture, corporate culture and investor activism in Japan

Japanese company Yakult Honsha is a company foreign investors may not be familiar with, even though they are familiar with its most famous product, the red-top yogurt-like probiotic drink sold in many parts of the world.

The company is also an interesting study on Japanese corporate governance and the relationship of mid-sized listed companies (Yakult has a market capitalization of around $ 9 billion) with foreign investors. Concrete example: its relationship with VGI Partners, a global equity asset management company based in Australia. VGI owns approximately 1% of the company, representing approximately 4.5% and 6% of its global and Asian-focused listed funds, respectively.

It’s easy to see Yakult’s promise. Although it has been around since the 1930s, it is a trusted brand in an increasingly health-conscious market, with significant room for improvement in China and the United States.

But it would be hard to find a corporate governance drama more emblematic of the occasional friction between reluctant foreign investors and traditional Japanese companies.

Last week VGI voted against the board candidates, the youngest of whom is 58. The board has gone from two non-Japanese members – the legacy of a relationship with Danone that ended last year – to none. Other Western investors also voted against the nominations. Calvert Research and Management, for example, votes against any board that is not majority independent.

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