June 10, 2015 / 9:00 AM / 3 years ago

Proxy adviser ISS recommends investors vote against Sharp, Sony CEOs at AGMs

TOKYO (Reuters) - Proxy investment adviser ISS advised shareholder to vote against reelecting the heads of Japanese electronics firms Sharp Corp and Sony Corp, both mid-restructuring, saying they are falling short of ISS return-on-equity (ROE) benchmarks.

Sharp Corp's Chief Executive Kozo Takahashi (C) is surrounded by reporters and photographers after a news conference in Tokyo May 14, 2015. REUTERS/Issei Kato

In a report issued on Wednesday, ISS recommended a vote against Sharp’s CEO Kozo Takahashi and Chairman Shigeaki Mizushima at the loss-making firm’s annual shareholder meeting on June 23. ISS said the pair were responsible for Sharp’s ROE being below a five-year average of 5 percent, a condition for the proxy adviser’s support.

Sony also falls short of that target, and ISS advised against reappointing CEO Kazuo Hirai at the firm’s annual investor meeting, also on June 23. The ISS recommendation comes despite a nascent recovery at Sony after years of losses that has seen its shares surge in the past year.

Despite its opposition to Sharp’s top leadership, ISS recommended investors back a $1.9 billion bank-led bailout announced by the firm last month. The bailout will be Sharp’s second major rescue in three years, after falling deep into the red as its smartphone display business was battered by competition from Asian rivals.

As part of the deal, Sharp is proposing placements of preferred shares and a capital reduction. ISS said it recommended voting for the measures, saying they were necessary “to keep Sharp’s operations afloat”.

Reporting by Ritsuko Ando; Editing by Kenneth Maxwell

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