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Hibiki Path Advisors Opposes Reappointment of Mr. Masayuki Nakayama as Board Member for Sanyo Shokai

We, Hibiki Path Advisors Pte. Ltd. ("Hibiki") manages and/or advises certain entities aggregate holding of 5.0% of Sanyo Shokai ("Sanyo") shares as of 29th February, 2020. On Sanyo’s Annual General Meeting scheduled on 26th May, 2020, RMB Capital ("RMB") proposed nominating its own CEO and board members, as opposed to the Company’s own nomination. RMB initiated its proxy solicitation asking for support to other shareholders.

As one of Sanyo’s long-term shareholder, we felt that there are many valid points that RMB raised in its proposal. While we will refrain from publicizing our position on each proxy, we strongly agree to one particular point made by RMB, that is, to "Oppose re-appointment of Mr. Masayuki Nakayama as board, based on the notion that existing management should take responsibilities for four straight years of earnings loss".

We are cognizant that the past few "revival" plans were well thought through by Sanyo, but was poorly executed. Based on circumstantial evidences, we believed that this is a "management" problem as the internal "proper assessment of achievements" were probably badly managed. We would like to take a moment to address something that lies commonly in many companies, the "air (culture)".

Management role is to set clear goals to each business units, but it heavily depends on (1) selection of the "correct" Key Performance Indicators, (2) well functioning Corporate Division to analyze KPIs, and (3) Human Resource division properly incentivizing the employees on the principle that; good work be rewarded bad work be punished. Over time, whether good or bad, the way such routines being run will start to form "air" in the company and dominates the behavior of each employees and business units.

We have concern in Sanyo’s historic Human Resource protocols as well as we are further concerned that a few key employees have been demoted recently on April 1st 2020 with unknown reasons. Mr. Masayuki Nakayama has been the head of Human Resource and Administrative divisions since 2017, which means he was in the centre of this "air (culture)" creation during the extremely difficult time when Sanyo was trying to revitalize itself.

If Mr. Nakayama continues to remain in the core management team, we feel it is difficult to change the "air", and it will be a potential obstacle for the newly invited talented management team who tries to execute changes. "Air" is something extremely important for Japanese Companies and we should not underestimate the power of it.

We would also like to mention that we especially support both Mr. Ohe (nominated by both) as well as Mr. Komori (RMB nomination) as board members. They are both critically important people who can lead the new Sanyo. Mr. Ohe served Mitsui & Co for many years, and his network is extremely valuable. Additionally, he has an impressive track record of reviving the sports brand company, Goldwin. We understand that he is a passionate, and decisive leader who can motivate the frontline of the business. Similarly, Mr. Komori is an outstanding business person with solid track record, reviving many companies such as KK ASKII and Kanebo KK as CEO in charge. They were both extremely difficult positions, with ailing businesses and complex legacy relationships with many prominent (and demanding) companies. However, Mr. Komori handled it decisively and professionally as the leader. We are aware that the company (Sanyo) is opposing Mr. Komori to join the board simply because he was nominated by a shareholder, but in our view, the "new" Sanyo needs him.

We will also use our best judgment in our votes for the independent directors. We are concerned that a few company nominations may have had a long standing business relationships with the previous management, and we are against such nomination. We will vote for the truly independent directors who can lead the company to the right direction.

There are no agreements in any form between Hibiki and RMB Capital, RMB Capital Management, LLC and its affiliates on joint exercise of proxies on Sanyo’s Annual General Meeting scheduled on 26th May, 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200510005006/en/


Yuya Shimizu
Chief Investment Officer
Hibiki Path Advisors