Key facts
- Japanese companies are increasingly offering shareholder benefits ('kabunushi yutai') at annual general meetings (AGMs).
- These benefits, which can include collectibles and food, aim to cultivate loyal retail investors.
- The practice is seen as a strategy to build shareholder support against a rise in activist investor proposals.
- A survey indicated that 11% of firms offered gifts at AGMs in 2024, up from 4% in 2021.
- Companies offering cash vouchers to vote has risen substantially, with over 120 firms participating last year.
Japanese companies are increasingly leveraging shareholder benefits, known as 'kabunushi yutai,' as a strategy to cultivate a base of loyal retail investors amidst growing pressure from activist shareholders. These benefits, which can range from orchids and beer to toy trucks and gift certificates, are offered to individual investors who hold a minimum number of shares.
The practice of offering shareholder perks dates back to 1899, with companies like Tobu Railway being early adopters. While initially common among movie theaters, department stores, and railway companies, the trend significantly accelerated in the 1980s and 2000s, especially after the economic bubble burst, as companies sought to retain investors and security firms used them to attract retail clients.
Currently, approximately 35% of Japanese public companies provide these benefits. The trend has seen a notable uptick in their distribution at annual general meetings (AGMs). A survey by Sumitomo Mitsui Trust Bank revealed that 11% of firms offered gifts at AGMs in 2024, a rise from 4% in 2021. Furthermore, the number of companies providing cash vouchers to encourage favorable voting has more than quadrupled since 2019, with over 120 firms participating last year.
Industry experts suggest the underlying goal is to create 'fan' shareholders who will hold shares long-term and support management proposals. While some analysts caution that this focus on loyalty might detract from improving corporate governance, it is also seen as a way to engage first-time equity holders with a company's business. Retail investors typically vote in favor of management, and their influence in corporate decision-making is expected to increase.