ISS backs ValueAct’s boardroom challenge at Seven & i Holdings

A leading proxy advisory firm, Institutional Shareholder Services (ISS), has supported ValueAct Capital‘s bid to secure positions for its four director nominees on the board of Japanese convenience store operator Seven & i Holdings. ValueAct, which owns 4.4% of Seven & i, has been particularly critical of the company’s conglomerate structure and has recently increased pressure further by publicly demanding that its president and CEO, Ryuichi Isaka, be among those replaced on the board.

According to the ISS report, Isaka, Katsuhiro Goto, and Toshiro Yonemura need to be held responsible for past underperformance, warranting votes against company nominees, including them and Shinji Wada and Fuminao Hachiuma. ISS also highlighted that ValueAct is advocating for a more orderly CEO succession process.

Since March, ValueAct has openly advocated for the replacement of four directors on the 14-member board with its own nominated candidates, including the company’s sustainability chief, Brittni Levinson. The ISS has now given its full support to ValueAct’s efforts, endorsing all of its candidates and outlining Seven & i’s shortcomings.

Based on the long-term track record of underperformance in various units and insufficient capital allocation, ISS argued that a change in the board is necessary. The recent strategic review’s counterintuitive findings raised concerns about the current board’s ability to hold management accountable and inject a sense of urgency into the proposed reforms.

In highlighting the qualifications of ValueAct’s nominees, ISS noted their board experience, capital allocation and executive experience, with Levinson adding a shareholder viewpoint.

ValueAct is no stranger to securing board positions at Japanese companies, having previously won seats at Olympus and JSR Corp. This latest development shows ISS backing ValueAct’s campaign, contributing to their capacity to drive changes in management at the underperforming Japanese convenience store operator, reports Channel News Asia.