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October 2026 edition · Methodology GNT-BDS v1.1.1 · Last updated 2026-10-23日本語 / English
Japan IR IndexIndependent research · English disclosure & shareholder communication

Questions shareholders ask at the AGM 02

Price-to-book below 1 and the cost of capital

Since the TSE asked companies in March 2023 to "implement management that is conscious of the cost of capital and share price", more of them publish something. Shareholder proposals now ask about the content, not whether it exists: "When and how will you earn more than your cost of capital?" This page checks, against real proposals and answers, whether companies answer that in numbers.

Published 19 October 2026; sources re-checked 24 October 2026. Vote figures come from extraordinary reports and company disclosures.

The questions as asked

The share price has risen, but the market still judges the company's measures insufficient. It should buy back and cancel about 10% of its shares, and let the AGM decide dividends too.

Summary of the reasons for Stella Chemifa's (4109) 2025 shareholder proposals (Nippon Active Value Fund).

The shares have underperformed TOPIX by 86.1% over five years. The company should buy back 9.9% of its shares to raise ROE.

Summary of Oasis Management's public statement on Toyo Seikan Group Holdings (5901), 2021.

The cost-of-capital disclosure says nothing concrete about improving capital efficiency. It is a superficial analysis.

Summary of the reasons for SANYO DENKI's (6516) 2026 proposals (Strategic Capital). Covered in theme 01

What an answer needs to contain

None of these proposals asks "do you disclose your cost of capital?" They ask how you will close the gap between the number you disclosed and where you are now.

  1. The cost of capital and how it is estimated (cost of equity, WACC), in numbers.F7S1
  2. A candid assessment of where you are: the trend in ROE, PBR and PER, and whether ROE is below the cost of capital. Also figures excluding one-off items.
  3. A target and a deadline: ROE of X% or more by which year.S1
  4. The levers, broken down: profitability (margins), capital (returns, use of debt, cash levels) and market valuation (disclosure and dialogue).
  5. Regular updates: at least once a year, with progress and the reasons for any shortfall.S7
  6. Why you are not doing what was proposed: comparisons of size and timing in numbers (for example, the proposed buyback against forecast net income).
  7. In English, on the same day: updates, board opinions and voting results.R3G6

Case: Stella Chemifa (4109), 2025–2026

Proponent
Nippon Active Value Fund, with Dalton Investments (Dalton held 15.82% of voting rights and became the largest shareholder on 3 Apr 2025, per the company)
Proposals
2025: four. 2026: one
Outcome
All rejected (best: 47.22%)
  1. Sets a return policy targeting a total return ratio of 100%
  2. Proposal letter: let the AGM decide dividends (articles), buy back about 10% (up to ¥5.577bn), a majority of outside directors, restricted stock pay
  3. Publishes its 4th mid-term plan (ROE of 8% or more, a cumulative three-year total return ratio of 100% or more, a ¥170 minimum annual dividend) and the board's opposition to all proposals on the same day
  4. AGM: the dividend articles amendment gets 47.22% (two-thirds needed), the outside-director majority 26.71% and stock pay 30.82%, all rejected. The buyback was not put to a vote once the first proposal failed. The president is re-elected with 89.21%
  5. Publishes an update to its cost-of-capital disclosure
  6. Second proposal (an articles change to the AGM record date, so the annual securities report can come out well before the meeting). The board opposes it but says earlier disclosure is under consideration
  7. AGM: the proposal gets 24.48% and fails. The president is re-elected with 97.30%
  8. Change of largest shareholder: FUKADA and joint holders (14.97%) become the largest; Dalton Investments no longer is
  9. Publishes a further update and approves a buyback of up to ¥1.9bn (2.5% of shares)

What the answer covered

  • Showed its return record in numbers: a total return ratio of 91.4% (FY3/2023), 101.5% (FY3/2024) and 107.0% (FY3/2025).
  • Called the proposed ¥5.577bn buyback "excessive" because it is more than twice the ¥2.7bn net income forecast for FY3/2026. The reason for opposing is given in numbers.
  • The August 2026 update admits that ROE is still below the assumed cost of equity (7–8%), that PBR has risen to about 1.2x, and that cash "still has room for further reduction".
  • English: the mid-term plan was published in both languages the same day (S1 = 5); every timely disclosure, including the board opinions and updates, had a same-day English version (R3 = 5); and the voting results are in English with vote counts (G6 = 5).

What it left unanswered

  • No target capital structure or cash level in numbers. In FY3/2026 the equity ratio rose because treasury shares were disposed of to a third party.
  • No explanation of the previous plan's ROIC shortfall (6.0% against a 6.2% target) or of the earlier cut to the targets (S7 = 4).
  • The annual securities report came out the day before the AGM in both 2025 and 2026. Bringing it forward is still "under consideration".
  • No English cross-shareholding disclosure or corporate governance report (G7, G1 = not found).

The 2025 and 2026 support levels cannot be compared directly because the proposals differ. The rise in support for the president (89.21% to 97.30%) also reflects factors other than the answer, such as the change in the largest shareholder.

Case: Toyo Seikan Group Holdings (5901), 2021–2026

Proponent
Oasis Management (2021)
Proposals
Five (a buyback, abolishing advisory posts, and others)
Outcome
All rejected (6.92–26.75%)
108th AGM, 25 June 2021: shareholder proposalsSupport
Abolish advisory and counsellor posts (articles)26.75%
Share buyback18.58%
Disclose a TCFD-based plan (articles)14.31%
Performance-linked restricted stock pay7.08%
Move to an audit and supervisory committee structure (articles)6.92%
(For reference) Company: re-electing the president80.28%

Every proposal failed, but the company later changed its capital policy substantially. On 12 May 2023 it announced its Capital Efficiency Initiative 2027, with ¥100bn of buybacks over the five years FY2023–FY2027. Its Medium-Term Management Plan 2030 (May 2026), published in English, says:

What the answer covered

  • Stated the shortfall itself (PBR below 1.0x) and ROE excluding one-offs (5.9%). The size of the gap is shared in numbers.
  • Set returns by DOE and gave the remaining buyback amount and deadline.
  • English: every results presentation comes with the same supplementary material as the Japanese (S2 = 5).

What it left unanswered

  • The English results summary (tanshin) is the cover page only (F1 = 2). Before any cost-of-capital discussion, English readers cannot read the results each period.
  • No English voting results (G6 = not found). The 2021 vote can only be read in the Japanese extraordinary report.
  • The plan gives no balance or reduction target for cross-shareholdings (theme 03).

The published documents do not show what happened between the 2021 proposals and the 2023 change of policy. We show only the order of events.

See also: SANYO DENKI (6516)

In March 2025 it published its view of its cost of capital and PBR. Its 10th mid-term plan (May 2026) states a cost of equity of "roughly 7–9%", ROE of 10% or more and a five-year cash allocation. PBR rose from around 0.8x to 1.2x (end of March 2026). All shareholder proposals were withdrawn the day after the plan was published. See the case in theme 01 →

Sources