Palliser Recognizes Progress in Nomination Process for Independent Director Candidates at Keisei Electric Railway
LONDON--(BUSINESS WIRE)--Palliser Capital ('Palliser') today published a letter regarding progress of the nomination and appointment process for the new Palliser-proposed independent outside director candidates to help reconfigure the Board of Keisei Electric Railway Co., Ltd. (9009 JT) ('Keisei' or the 'Company'). Palliser's letter also addresses important points that were misrepresented in the Company's press release of April 30 and repeats its call on Kobayashi-CEO and the current Board to focus on measures to resolve the wider governance and capital allocation failings detailed in Palliser's materials as part of the Company's new Medium-Term D2 Plan on May 21, 2025.
Full details relating to Palliser's ongoing engagement, including its detailed open letter to the Keisei Board, and accompanying presentation, and independent expert findings are available at KEISEI100.com
Full text of the letter follows:
3-3-1 Yawata, Ichikawa City, Chiba Prefecture 272-8510
Keisei Electric Railway Co., Ltd. ('Keisei' or the 'Company')
Dear Kobayashi-CEO and the Members of the Keisei Board of Directors
Engagement with Palliser-Proposed Candidates 1
We refer to our open letter to the Keisei Board of Directors on 24 April and the Company's initial public response on 30 April titled 'Notice Regarding the Progress of Dialogue with Palliser' (' Company Statement '). We also refer to the nomination process which is now in-progress in respect of the new Palliser-proposed independent outside director candidates, including the candidate interviews which took place at the Company's offices yesterday.
As the Company Statement correctly points out, Palliser first wrote to the Board about independent outside director candidates on 5 March, nearly four months ahead of the 2025 AGM and after repeated efforts to engage more broadly after the 2024 AGM. However, some important points were then misrepresented in the Company Statement:
First:
Palliser wrote privately on five separate occasions on 5 March, 12 March, 15 March, 21 March, and 2 April to request a meeting with members of the Nomination/Compensation Committee (' Committee ') regarding Palliser-identified Board candidates. As we repeatedly explained, we identified a number of best-in-class Japanese independent outside director candidates, but it was our and their preference to first gather important information about Keisei's currently opaque director nomination process, better understand management's perspectives on Board composition, and gauge the Company's interest in working collaboratively on a consensual appointment process before finalising our proposals and providing the names of the candidates.
After our requests went unaddressed, we provided background information on the candidates on 2 April and put our questions on the nomination process forward in writing – this letter went unanswered.
The Board's persistent refusal to meet with us or respond to our basic questions is, unfortunately, consistent with the rejection of our previous meeting requests on 11 September 2024, 9 October 2024, 31 October 2024, and 6 December 2024. In respect of which, Keisei's IR team instructed us that having exercised shareholder rights at last year's AGM, Palliser would now have to ' re-earn the right to meet with the Board or Management ' despite being one of the Company's largest shareholders.
Following the Committee's and the wider Board's refusal to engage constructively, we provided full names of the candidates to the Company privately on 23 April, for the Committee to sincerely consider the candidates.
Second, contrary, therefore, to what the Company Statement suggests, it is evidently both our genuine intention and expectation that Keisei will nominate the proposed candidates at the AGM. Palliser decided in good faith not to formally exercise shareholder rights to propose the candidates itself, in the belief that the Company would be open-minded and recognise the importance of a consensual process given the multiple shortcomings of the Board's current configuration. This is why we encouraged the Company to engage in private on multiple occasions to better understand our concerns and how we think these could be easily addressed.
Third, our open letter did not suggest that the Company had refused to conduct candidate interviews. In fact, we said that we were pleased the Company has finally indicated a willingness to engage with our proposed candidates.
Subsequent to our letter and publication of our analysis, our meeting with Inside Director Oka-san last Friday at the Company's offices to discuss the director candidates and the positive measures the Company can take, and shareholders expect to see, in the D2 Plan was an encouraging first step. However, further constructive dialogue with Palliser and other shareholders, as Keisei has foreshadowed in the Company Statement, including with the Committee, is needed.
This initial momentum is helpful and encouraging on the assumption that the interviews were conducted in good faith as part of a rigorous, transparent, and objective evaluation of the candidates which implicitly recognises the urgent need for holistic Board reconfiguration at Keisei and the merits of the individual profiles, including their cultural fit. In our view, the nomination of all four of these candidates should be a straightforward matter, if the nomination and review process is conducted appropriately and in good faith by the Committee.
That said, to ensure the Committee conducts a transparent process, we encourage the Company to promptly disclose updates on the status of the nomination process, as well as the comprehensive reconfiguration of the Board at the 2025 AGM, to bring Keisei in line with key peers, as discussed with Director Oka-san and set out in Palliser's materials.
Finally, following our 24 April letter and accompanying presentation and independent expert report, the Company's decision to now publish its D2 Plan on 21 May 2025 – a number of weeks later than expected – is a positive step. As discussed, to convincingly address the Company's persistent underperformance and chronic undervaluation, it is important that the D2 Plan includes a set of credible and transparent peer- and TSE-aligned measures. As explained by the detailed analysis in our 24 April materials, in addition to comprehensive governance measures, this should include a properly calibrated capital allocation framework with a pathway to right-size Keisei's stake in OLC, a peer-aligned dividend payout ratio and share buyback programme, and performance-linked management compensation. We trust that the Company will take this additional time to reflect further on what's needed in this regard to ensure that the new MTP showcases an approach that can help rebuild market trust.
While we remain available for further dialogue with Keisei management on the D2 Plan and the appointment of the new independent outside director candidates, we and other Keisei stakeholders expect prompt further detail from the Company on the advancement of the candidates' nominations and the Board's proposed governance initiatives to regain market trust and resolve the Company's undervaluation.
Sincerely,
For and on behalf of
Palliser Capital (UK) Ltd
James Smith
Chief Investment Officer
About Palliser Capital
Palliser Capital is a global multi-strategy fund. Our value-oriented investment philosophy is applied to a broad range of opportunities across the capital structure with a focus on situations where positive change and value enhancement can be achieved through thoughtful, constructive, and long-term engagement with companies and across a range of different stakeholder groups. Palliser Capital is one of the largest Keisei shareholders with a stake in excess of 4.5%.
1 This letter is sent to you on behalf of Palliser Capital (UK) Ltd (together with its affiliates, ' Palliser ', ' we ', ' us ' or ' our ').
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Vail Resorts price target lowered to $244 from $247 at Truist
Truist lowered the firm's price target on Vail Resorts (MTN) to $244 from $247 but keeps a Buy rating on the shares after its Q3 earnings beat. While still light on specifics, the firm is 'encouraged' by commentary from the 'new' CEO that sounds like he is working on some new ideas on making needed improvements, the analyst tells investors in a research note. Improvements, which the company made clear will not all happen overnight, include better consistency on guest and employee experience throughout the season which in theory should lead to stronger revenue growth, Truist added. Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>> See today's best-performing stocks on TipRanks >> Read More on MTN: Disclaimer & DisclosureReport an Issue Vail Resorts: Navigating Strategic Adjustments with a Hold Rating Cautious Outlook for Vail Resorts Amid Leadership Changes and Financial Adjustments Vail Resorts Reports Q3 Earnings and Updates Guidance Vail Resorts Reports Strong Q3 Results and Updates Fiscal 2025 Guidance Vail Resorts provides early season pass sales results Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 hours ago
- Yahoo
Will Warren Buffett's Replacement Reward Shareholders With Dividends?
Warren Buffett has announced that he will retire at the end of 2025. Buffett will be replaced by longtime Berkshire Hathaway executive Greg Abel. Given the gigantic hoard of cash on Berkshire Hathaway's balance sheet, some investors might wonder if Abel will push for a dividend. 10 stocks we like better than Berkshire Hathaway › Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) annual meeting is watched closely by Wall Street. Normally that's because investors want to see if Chief Executive Officer Warren Buffett shares any investment wisdom that they can use. This year, however, the annual meeting included the shock announcement that Buffett was giving up the CEO role at the company he turned into a Wall Street legend. What comes next is a huge question mark. One area that will be of interest to many is dividends, which Berkshire Hathaway doesn't pay. That's because Buffett doesn't like to pay dividends. Will Greg Abel, who is slated to replace Buffett, take a different approach given the $347 billion in cash the conglomerate has on its balance sheet? Many consider Buffett a rare investment talent. That's true in a lot of ways, but he is far from infallible. In his shareholder letters, he actually goes to great lengths to discuss the mistakes he's made. But he also talks about larger investment topics that have helped to create value for shareholders over time. One of the big ones is compounding. His investment approach is fairly simple in many ways. He attempts to buy well-run businesses when they are attractively priced, if not outright cheap. But the next step is the big one. He holds on to them for the long term so he can benefit from their growth. They are, effectively, compounding for him, as new growth comes atop old growth. There's a subtle takeaway here: Compounding the dividends Berkshire collects is an important part of the story. Not only are the companies growing, but when Buffett gets a dividend, he also holds on to it and uses that cash to make more investments. They may be in the same stock or a new one, but the point is to put the dividends to work so they add to the compounding. You can easily do something similar with dividend reinvestment. The big goal is growth on top of growth, with the dividends buying you more shares over time. That said, Greg Abel confronts the classic problem of big numbers. It is hard to meaningfully expand a business like Berkshire, which has a market value of more than $1 trillion. S And yet it is hard to put $347 billion worth of cash to work, since few companies ever grow to that size. In some ways, Abel is inheriting a big problem on his balance sheet: The longer the huge cash pile sits around, the more it acts as an anchor to performance. An easy solution would be to simply pay a dividend. Either a large one-time payment or a smaller regular quarterly payment. Don't count on either one. For starters, Abel has been at Berkshire Hathaway for a quarter of a century. He has been steeped in Buffett's investment approach for a very long time. It is unlikely that he will step into the CEO role and start making extensive changes, since he has likely been involved in most investment decisions for at least a few years now. The next big reason to think that no Berkshire dividends will be forthcoming is that the CEO isn't the one who makes that decision. It is the board of directors that decides a company's dividend policy. Buffett may be leaving the CEO post, but he will remain the chairman of the board. So Abel would have to convince him that a dividend made sense, which seems like it would be a tall order given Buffett's history. All in, it seems unlikely that Abel's rise to CEO of Berkshire will trigger an instant change in dividend policy. However, that doesn't mean that the company will never pay a dividend. The cash problem isn't a new one, though it does get increasingly larger over time. At some point, the board may have little choice but to reward long-time investors with some form of dividend. It just doesn't seem likely to happen when Buffett gives up the role of CEO at the end of 2025. Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $869,841!* Now, it's worth noting Stock Advisor's total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy. Will Warren Buffett's Replacement Reward Shareholders With Dividends? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
6 hours ago
- Yahoo
Elon Musk's feud with Donald Trump is hugely damaging to Tesla but don't expect any action from the board
How should a corporate board respond to a CEO publicly insulting and shaming a sitting president? It's not a question that most need to consider, since few chief executives dare to directly criticize the White House. When CEOs do speak out against a federal directive, their messages are usually delivered behind closed doors, or in a collective open letter. But this week, Elon Musk changed all that and forced the issue in a prolonged public spat with Donald Trump. The pair had a much-anticipated falling out over Trump's budget, also referred to as the 'big beautiful bill,' on Thursday, which quickly got personal. Musk asked his social media followers if it was time to create a new political party, said that Trump's tariffs would cause a recession, and even claimed that Trump's name was in government documents about Jeffrey Epstein, the convicted sexual offender. 'That is the real reason they have not been made public,' Musk wrote. The feud has already been costly for Musk and his many businesses, including Tesla. The automaker's shares took a tumble as the back-and-forth took over the news cycle, dropping 14% in on Thursday, and costing shareholders $150 billion. Now analysts warn that feuding with Trump could cost Tesla billions, considering that Trump could repeal electric vehicle tax credits and other measures that have boosted Tesla's earnings. The company could also face increasing regulatory obstacles around its autonomous driving vehicles, the technology that is meant to drive Tesla's future and has been cited by stock watchers as a reason for the stock's sustained eye-popping performance. Tesla bull and Wedbush analyst Dan Ives seemed to speak for investors early on Friday when he wrote in a research note: 'This needs to calm down.' At a regular company, there's a solid chance that the events of the last few days would spur a board to dismiss a CEO. But will the Tesla board fire Musk to protect public shareholders from potential damages? 'They should,' Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, told Fortune. 'But they won't.' The Trump-Musk spat is just the latest in a series of events that have forced the question of what role Tesla's board actually plays in the company. 'Over the years, Musk's behavior has become more outrageous,' says Elson. 'The board's lack of response makes you wonder, 'Who are these people? Why are they there?'' It has long faced criticisms for being too close to Musk, and therefore willing to overlook numerous management issues. For instance, it famously approved Musk's much-disputed 2018 pay package for $56 billion, and has silently witnessed a year of high-profile divisive behavior from the chief executive that has led to public protests and customers distancing themselves from the company. And recent allegations about Musk's drug use echo reports that have surfaced in the past without putting Musk's role at risk. There are a few contributing factors as to why that is. Musk is a controlling shareholder in Tesla, where he holds 22% of the voting power, making it extra challenging for board members to have the votes needed to force him out. The board is also in a tough position in that firing Musk could tank the stock, considering that his name is so closely associated with the company. Many directors also have particularly close ties to Musk. That includes his brother Kimbal Musk, an entrepreneur and restaurant owner, and Joe Gebbia, a cofounder of Airbnb and a friend of Musk's. There are no car industry or green energy CEOs in the group, as one might expect at a typical EV company. The directors are also paid very well. This year, a Delaware court ordered the board to give back more than $900 billion in pay after finding it had paid itself too handsomely. Robyn Denholm, Tesla board chair since 2018, earned $600 million, far more than people with the same position at other companies. The court found 'the compensation was so significant, it made it really almost impossible for them to be independent directors,' says Elson. 'It is difficult to get a man to understand something when his salary depends on his not understanding it,' says Nell Minow, a corporate governance expert, quoting Upton Sinclair. 'That's this board.' To be sure, this year, there were signs earlier this year that Tesla's directors were taking more control over the company's governance. Last month, the Wall Street Journal reported last month that the board had begun looking for a successor and selected a search firm to assist them. It also reported that the board had met with Trump weeks before he announced he would be spending less time at the White House. It seemed that between the backlash against Tesla provoked by Musk's focus on Washington, and Tesla's shrinking share price, finally pushed the board to act. But the board denied the report outright, with Denholm calling it 'absolutely false.' Even considering his own predilection for conflict, Elon Musk's latest squabble is in a category of its own. But board experts agree that to expect action from the Tesla board is misguided. 'There have been so many 'Now the board has to do something moments,' and they have failed every time,' says Minow. 'I no longer feel that there is such a thing as 'Now they have to do something.'' There are technically ways that shareholders could move the needle if they wanted Musk out. They could vote directors off the board via shareholder proxy votes, and hope that new directors would fire Musk. Or they could try to sue the board for not kicking Musk to the curb when he put the brand at risk and split his focus between Washington and Tesla. But a shareholder who wanted to do that would need to own up to a 3% stake in the company, points out Ann Lipton, associate dean for faculty research at Tulane University's Law School, and governance laws make it all but impossible to do. 'No shareholder is going to be able to show that this board is acting in bad faith by failing to replace Musk as CEO, which is really the level that they'd have to show,' she said. It's still theoretically possible that a Tesla board director could try to bring about change by suggesting Musk go. But they would have to make peace with potentially losing their roles, says Elson. 'They would say, 'Look, I will vote to move him along. And if I lose, I leave. I can't do this anymore,'' says Elson. Whether they'll do that depends on whether they're people of principle, he added, or 'people of convenience.''We'll have to see,' he said. This story was originally featured on
