A shareholder of Seven & i Holdings, ValueAct Capital, published a presentation detailing the case for change at Seven & i. This follows ValueAct Capital continuously pushing for change and Seven & i Holdings declining ValueAct’s board nominees.
The presentation states the following:
- The president has ignored long-standing shareholder concerns with the status quo conglomerate strategy. Shareholders have expressed concern with the status quo strategy ever since the Holding company was formed in 2005, including in 2022 when shareholders spoke, and six new outside directors joined the board. The president’s recent “Group Strategy Re-Evaluation,” which was expected to address shareholder concern, instead followed a biased and opaque process, re-affirmed the same strategy Seven & i has been pursuing for 18 years and disappointed the market.
- The president has established a seven-year track record of stakeholder harm. The data paints a clear picture of a corporate culture where stakeholders are an afterthought. Independent surveys of Seven & i’s stakeholders show: the majority of employees are not engaged, the majority of shareholders do not support the current strategy, and the majority of 7-Eleven franchisees have health and safety concerns. ValueAct has shared such objective data with the president and his subordinates, and their reaction has been to ignore, dismiss and fail to act.
- The president has established a seven-year track record of weak execution and underperformance. When President Isaka’s tenure began in 2016, he promised to turn around Ito-Yokado and Sogo & Seibu and set 10 numerical targets. Seven years later, Ito-Yokado is still earning unacceptably low returns on capital and the president’s answer is more restructuring within the group after 18 years of trying. Seven years later, President Isaka has failed to turn around Sogo & Seibu and instead pursued a sale. Seven years later, President Isaka has failed to meet nine out of his 10 numerical targets. And over President Isaka’s seven-year tenure, Seven & i has underperformed its retail peers on total shareholder return.
- The president has acted in bad faith to maintain his status quo strategy. For over two and a half years ValueAct has attempted to engage constructively with Seven & i, but the president and his subordinates have acted in bad faith, as ValueAct outlined in its April 20 letter. The president also failed to disclose a reported takeover approach in 2020, and shareholders were denied the chance to consider selling their shares at a premium.
ValueAct has submitted shareholder proposals because it has concluded that change is needed for 7-Eleven to reach its full potential.
ValueAct urges shareholders to vote for its nominees, four new outside directors, to strengthen the existing board with their global experiences, strategic skills and the voice of a long-term shareholder. ValueAct believes the addition of its nominees and the removal of the entrenched president and his supporters will allow the whole board to execute a pro-governance, pro-stakeholder mandate including a careful and deliberate president succession process, an objective and thorough strategic review, and the appointment of an independent chair.