February 12, 2020Engagement Agenda“Many ‘Against’ Votes”
Responses by Companies Against Which Many “Against” Votes Were Cast at Their
General Meeting of Shareholders in 2018, AndSending Letters to Companies Against Which Many “Against” Votes Were Cast at Their
General Meeting of Shareholders in 2019

Since October 1, 2018, the Institutional Investors Collective Engagement Forum (hereinafterreferred to as “IICEF”), together with the five companies participating in IICEF’s collective engagement
program, namely Mitsubishi UFJ Trust and Banking Corporation, the Pension Fund Association,Resona Asset Management Co., Ltd., Sumitomo Mitsui DS Asset Management Company, Limited andSumitomo Mitsui Trust Asset Management Co., Ltd. (in alphabetical order; hereinafter referred to as
the “Participating Investors”), has sent request letters to certain companies. In the letters, werequested explanations on the outcomes of the analysis of the reasons for the considerable numberof “against” votes cast against the management’s proposals electing directors for top management
at their general meeting of shareholders, even though those proposals were still approved. In thesame manner, we requested considerations of the need for shareholder dialogue and other measures.
***1. Overview of this agenda
In recent years, with more proactive and stricter stances on exercise of voting rights by investors
and shareholders including institutional investors in and outside of Japan, there are an increasing
number of cases where quite a few votes are cast against company’s management proposal bills
at general meetings of shareholders.
Supplementary Principle 1.1.1 of Japan’s Corporate Governance Code stipulates “When theboard recognizes that a considerable number of votes have been cast against a proposal by thecompany and the proposal was approved at a general meeting of shareholders, it should analyze
the reasons behind opposing votes and why many shareholders opposed, and should consider theneed for shareholder dialogue and other measures.”
Contents of proposals against which a considerable number of “against” votes are cast at a1
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general meeting of shareholders are diverse. However, this time, we focused on the cases where a
considerable number of votes have been cast against management’s proposals electing directors
for top management. In these cases, apparently some shareholders are supposed to have foundconcerns over the overall management quality, business performances, etc., of the company andtherefore we decided to request explanations on their analysis of the reasons behind the “against”
votes as well as their considerations of the need for shareholder dialogue and other measures.

[Matters we requested explanations](i) How has the board conducted discussion and analysis of the reasons behind a considerable
number of shareholders casting “against” votes for management’s proposals electing directors
for top management? What measures have been taken to understand the reasons for theshareholders’ “against” votes? How has the board considered the need for shareholder dialogue
and other measures?
(ii) What views have outside directors in particular expressed on the general meeting’s vote results,
and discussion and analysis of the results at board meetings?
(iii) Based on these considerations, what does the company think about its key challenges in its
management policy and strategies, corporate governance, efficient use of capital, and so forth?
How is the company going to deal with the challenges?

2. Status of holding collective engagement dialogues
The contents of this agenda were summarized as the common views of the Participating
Investors, and we sent letters to 30 companies selected based on certain criteria among thecompanies at which a considerable number of “against” votes were cast for management’s
proposals electing directors for top management at their general meetings of shareholders in May
and June 2018, and received explanations from 29 companies through interviews or documents.
In many cases, the management team and directors explained the management views andmeasures in detail during the interviews with coordinator/secretariat of IICEF, and in some cases,
top management people conducted engagement with the Participating Investors.
As a result, it was found that every company has analyzed the results of the general meeting ofshareholders and the reasons for the many “against” votes and reported the findings to the board
members. Although there seems to still be dispersion among companies in the level of discussion
by the board, there were some companies which had undertaken new management measures andreinforcement of IR and SR activities. On the other hand, there also were companies whose2www.iicef.jp

understanding on the management issues which caused the “against” remained superficial, andtheir activities toward improvement seemed insufficient.
We provided each company with comments by the Participating Investors on the company’s
explanations as feedback.
Approximately 60% of the companies to which we sent letters showed decline in the rate of“against” votes for management’s proposal electing directors for top management at their general
meetings in 2019. On the other hand, some companies faced an increase in the rate of “against”
votes; and we intend to continue paying attention to the measures of, and holding dialogue with,these companies.

3. Starting to send letters for 2019
We started in December 2019 to send letters to 16 companies requesting explanations on theresult of the considerations concerning the analysis of the reasons for the considerable number of“against” votes cast against management’s proposals electing directors for top management attheir general meetings of shareholders to be held between March and June 2019, even though theproposals were still approved, and the need for shareholder dialogue and other measures, as wedid in 2018.

[Reference: Related stipulations in the U.K. Corporate Governance Code]
There are stipulations in Chapter 1, Provision 4 of the U.K. Corporate Governance Code (revised inJuly 2018; enacted in January 2019) as follows:“When 20 per cent or more of votes have been cast against the board recommendation for aresolution, the company should explain, when announcing voting results, what actions it intends totake to consult shareholders in order to understand the reasons behind the result. An update on theviews received from shareholders and actions taken should be published no later than six months
after the shareholder meeting. The board should then provide a final summary in the annual report
and, if applicable, in the explanatory notes to resolutions at the next shareholder meeting, on what
impact the feedback has had on the decisions the board has taken and any actions or resolutions now
proposed. ”

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***Contact information:
Institutional Investors Collective Engagement Forum
Directors in charge: Yuki Kimura, Naomi Yamazaki and Ryusuke Ohori
Address: Tokyo Entre Salon, Shinmaki-chou Building Annex 1, 3-2-14, Nihonbashi, Chuo-ku,
Tokyo 103-0027 JAPANE-mail: info@iicef.jp

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