Dropping the takeover defence for buybacks and a higher dividend (2024)

The decision to put down the shield

To read this sequence only as a capitulation to activist pressure is to miss the order of events. In February 2023 Zojirushi rejected everything — abolition of the takeover defence and the dividend increase alike. Two years later, not under external compulsion but as a discussion of its own board, it folded the defence and executed a total payout ratio of 100.1%. The core of the decision lies in a family company, with the founding family as its principal shareholder, letting go of the shield that protected control and taking up part of the shareholder proposal’s argument in its own words.

Putting down the shield did not change the fact that the Ichikawa family remains the core shareholder, and the ability to pay out so much rested on strong domestic sales of high-priced products under a weak yen, and on high earnings supported by a gain on land sales. The 100% payout was a three-year commitment only, and from the following year the company has returned to a normal policy of a payout ratio of 50% or more. The external environment — a slowing China, American tariffs — remains. A company that rejected a shareholder proposal and then, given time, translated part of its opponent’s case into its own judgement: more than whether the defence survives, it is how outside pressure is converted into internal language that shows the quality of management.