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Pasona trades at 0.46× book value, with ¥41.9bn of net cash against a market capitalisation of ¥58.8bn.
For Pasona Group's annual general meeting to be held on 28 August 2026, a conditional shareholder proposal has been submitted: an authorisation for the company to acquire shares held by the founding-family shareholders at no premium to the market price. The authorisation lapses if, within three months of the AGM, the board adopts and discloses a Family Governance Basic Policy meeting five stated requirements. We believe that either the adoption and disclosure of a qualifying Family Governance Basic Policy containing all five required items, or a potential reduction in the founding-family shareholders' combined voting interest through a buy-back, would contribute to enhancing shareholders' value.
This website is operated by Nanahoshi Management (UK) Ltd. (registered name: Nanahoshi Management (UK) Ltd.; "Nanahoshi", "we"). It is a campaign site directed at shareholders of Pasona Group Inc. ("Pasona") resident in Japan. Updates are posted on our X account @nanahoshiuk and our LINE account.
Five numbers that frame the issues — and what we ask in response.
Each card states the measurement basis and links to the section or exhibit where the figure is examined.
One proposal, two possible outcomes.
The proposal before the annual general meeting of 28 August 2026 — “Acquisition of Own Shares from Specified Shareholders (the Founding-Family Shareholders)”, subject to a lapse condition — addresses the governance risks that accompany the founding-family shareholders' presence. Its principal purpose is to reduce the founding-family shareholders' influence, raise the transparency of the company's management, and protect minority shareholders. If Pasona adopts and discloses the prescribed Family Governance Basic Policy, no buy-back takes place.
Adopt and disclose a “Family Governance Basic Policy” within three months
- No acquisition of own shares takes place
- The relationship between the founding family and the company is clarified, and the transparency of governance improves
Do not adopt and disclose such a Basic Policy
- The board would be authorised to consider acquiring shares held by the founding-family shareholders at or below the market price, subject to their agreement and the statutory distributable-amount limit
- If the acquisition of all shares held by the founding-family shareholders is carried out, the founding family ceases to be a shareholder and the family-governance concerns are substantially reduced
The lapse condition, precisely
The authorisation lapses only if, within three months of the close of this year's AGM, the board resolves a “Family Governance Basic Policy” and discloses it in the corporate-governance report, by timely disclosure, or on the company's website. The Basic Policy must include at least all five of the following:
- Matters securing the objectivity of the selection of representative directors and the nomination of director candidates;
- A procedure under which Pasona confirms with the founding-family shareholders their policies on the exercise of voting rights, involvement in Pasona's management and the holding of Pasona shares, and discloses the results;
- A succession plan for the representative director(s) and other key executives;
- Measures to protect minority shareholders in light of the presence of founding-family shareholders; and
- The results of Pasona's self-assessment of its family governance based on the “Family Governance Guidance Checklist” published by the Ministry of Economy, Trade and Industry (METI), or equivalent materials.
Price mechanics: no premium
No premium attaches to the acquisition price. The price is, in principle, the lower of the market price on the day before the AGM and the market price on the day before the acquisition agreement is signed — so the proposal confers no special benefit on the founding-family shareholders above the market price.
Any acquisition of own shares must also remain within the distributable amount under Japan's Companies Act. The buy-back occurs only if the prescribed Basic Policy is not adopted and disclosed — and then only with the founding-family shareholders' agreement, following consideration and a resolution by the board.
Fuller detail, including the definition of “founding-family shareholders”, is set out in the Q&A.
A valuation discount with identifiable governance and capital-allocation drivers.
In our view, the discount to book has identifiable drivers: a balance sheet burdened with excess cash; capital allocated below the cost of equity; a medium-term plan that lacks capital-market discipline; and a founding-family relationship whose governance remains opaque — from a ¥680m related-party donation disclosed only after the AGM, to a succession reportedly settled orally two days before the board resolved it. The 2026 shareholder proposal is designed so that either outcome — the adoption and disclosure of a qualifying Family Governance Basic Policy containing all five required items, or a potential reduction, at no premium, of the founding family's stake through a buy-back — would contribute to enhancing shareholders' value.
Seven questions, drawn from public disclosure, frame the case:
Excess cash and an inefficient balance-sheet structure.
As Exhibit 1 shows, against Pasona's market capitalisation of ¥58.8bn, its net cash — cash and equivalents less interest-bearing debt and deposits received — stands at ¥41.9bn. Equity, meanwhile, has built up to ¥126.9bn: an equity ratio of no less than 56.0% (on a basis excluding deposits received on entrusted engagements).
The logic of the cost of capital is that a company creates value when the assets it holds generate returns above the expectations of the shareholders, banks and other providers of that capital. Given the unusually large amount of cash retained on the balance sheet, Pasona does not appear to be generating returns consistent with its capital providers' expectations.
As a result, as Exhibit 2 shows, our estimated Value of Operations for Pasona is ¥40.7bn: the operating business is receiving a strikingly low valuation against an enterprise value of ¥109.7bn. One reason for that assessment is that the company retains cash as non-operating assets instead of putting it to work in the business.
An anomalously low valuation of the shares.
As Exhibit 3 shows, Pasona's price-to-book ratio (“P/B”) stands at 0.46× — a strikingly low level. One driver, as set out above, is the distorted composition of the company's balance sheet.
In addition, as Exhibit 4 shows, Pasona has not put to effective use the ample funds obtained from the sale of its subsidiary Benefit One, and we consider this to be why the share price has remained soft.
Total shareholder return points the same way. Since 8 February 2024 — the announcement of Dai-ichi Life Holdings' agreement to launch a tender offer for Benefit One — Pasona's TSR has moved in negative territory in absolute terms and has underperformed the index substantially (Exhibit 17); the greater part of that underperformance has arisen since the announcement of the change of president on 14 April 2025 (Exhibit 18).
Pasona does not customarily put the appropriation of surplus to a resolution of the general meeting; dividend amounts are determined by board resolution each year. Given that the company's use of funds is not appropriate, we look to the company to place a proposal on the appropriation of surplus, including the dividend, before the AGM as a board-sponsored proposal.
Understand why the valuation of the shares is at a low level.
Submit a board-sponsored proposal on the appropriation of surplus, including the dividend, to the AGM.
Why discounts arise: the equity spread.
As Exhibit 5 sets out, one way of thinking about share-price formation from the relationship between ROE (return on equity) and the cost of equity is the “equity spread”. Equity spreads take various forms, but rest on the premise that profits earned at a given level of capital efficiency (the “achieved ROE”) are reinvested in businesses generating the same level of return. If, instead, earned profits are reinvested in businesses expected to return more than the achieved ROE, P/B will exceed 1×.
For instance, as the right-hand panel of Exhibit 5 shows, if a company's cost of equity is assumed to be 8%, then choosing uses of capital expected to return 8% or more would, all else being equal, support a P/B ratio of 1× or above. As Exhibit 6 shows, however, choosing low-return uses of capital makes the market conscious of a decline in future ROE, and P/B is valued below 1×. To repeat: the stock market values Pasona at a P/B of 0.46×, far below 1×.
Make only those investments for which returns above the cost of equity are expected.
A ¥680m related-party donation — disclosed only after the AGM.
As Exhibit 7 shows, Pasona's founder, Yasuyuki Nambu, has articulated a philosophy under which corporate activity should not stop at the pursuit of profit but should also give back to society. We recognise a measure of merit in that philosophy.
As set out above, however, Pasona's shareholders' value is at present severely impaired. In a joint-stock company, properly securing the interests of shareholders — the company's ultimate principals — is indispensable; even where social contribution is pursued, directors have, in our view, a parallel duty to remedy the impairment of shareholders' value without delay.
Despite this, as Exhibit 8 shows, the company made a donation of as much as ¥680m to a related party. Moreover, as Exhibit 9 shows, the donation was not disclosed as a “related-party transaction” in the supplementary materials to the convocation notice (the electronically provided materials for the 17th annual general meeting). In our view, the absence of this related-party transaction from the AGM materials raises a serious disclosure concern.
A “related-party transaction”, for these purposes, is a transaction with a counterparty that stands in a special relationship with the company. As Exhibit 10 notes, such transactions carry the risk that the company is made to enter transactions it does not need, or that transaction terms are improperly distorted.
Make no donations to related parties.
Disclose the annual securities report at least two weeks before the date of the general meeting.
A plan without portfolio restructuring — or a credible path to ROE 8%.
As Exhibit 11 records, on 17 July 2025 Pasona published the full outline of a five-year medium-term management plan with FY5/2026 as its first year. However, the specific policy on — and positioning of — the business-portfolio restructuring referred to in the company's corporate-governance report of 14 April 2025 were not set out; revenue targets are disclosed for only some segments; and, among the segments that are disclosed, the profit targets do not use a consistent metric — leaving the plan short of specifics as a whole. In addition, in FY5/2026, the plan's first year, the company-wide cost-to-revenue ratio remained at its FY5/2025 level and the company recorded a net loss of ¥3.39bn, so the concrete path of profit and equity towards the ROE 8% target remains unclear.
The plan thus appears to have been formulated taking the current business segments as given, without contemplating portfolio restructuring. As for the levels of profit and equity needed to achieve the ROE 8% target Pasona has set, management explained at the results briefing held the same day that the figures were a “build-up”. As Exhibit 12 shows, a medium-term plan should instead be constructed by backcasting — designing the present from the future goal of enhancing shareholders' value, rather than extrapolating the status quo. And as Exhibit 13 shows, a medium-term plan is nothing less than a promise to shareholders: management is expected to take responsibility for delivering the enhancement of shareholders' value.
We would add that the company-wide cost reduction and the 5% profit-margin target closely resemble the content proposed by Oasis Management in 2017–2018 — adopted, in effect, only after fully eight years. Seen in that light, business-portfolio restructuring is an indispensable perspective for enhancing shareholders' value today, and there is no room to defer it any further.
We therefore ask that the current medium-term plan be revisited — re-examining each segment's positioning from the standpoint of portfolio restructuring and adding more specific, quantitative explanation — and that a new medium-term plan conducive to the enhancement of shareholders' value be formulated.
Revise the medium-term management plan and formulate a new plan that serves the enhancement of shareholders' value.
A succession decided in substance before it was decided in form?
As Exhibit 14 shows, Pasona explains that the change of president was resolved by the board of directors following deliberation and a recommendation by the nomination and remuneration committee. According to an interview with the new president (Nikkei, 12 September 2025), however, the founder told him of the succession directly two days before that board meeting. If that account is accurate, there is a concern that the nomination and remuneration committee's recommendation and the board's resolution have become organs that ratify the founder's wishes.
METI adopted its “Family Governance Guidance” on 5 June 2026, which includes a published checklist (Exhibit 15). For Pasona too, it would be useful — and would be expected to raise transparency — to define clearly the scope and role of the family's (founding family's) involvement in management, where it begins and where it ends, and to clarify how the family engages as shareholders in shareholder proposals, the exercise of voting rights and the like.
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| Rank | Shareholder | Voting rights | Combined |
|---|---|---|---|
| 1 | Mr Yasuyuki Nambu | 38.93% | 47.72% |
| 2 | Nambu Enterprise Co., Ltd. (asset-management company) | 8.79% |
Raise the transparency of family governance.
Reflect the intent of the Family Governance Guidance in the company's management.
By the founder's own yardstick, a business overdue for review.
As Exhibit 16 shows, the founder has stated expressly the philosophy that, outside social-contribution activities, deficits are not to be tolerated. Pasona, meanwhile, positions Regional Revitalisation & Tourism not as social contribution but as a revenue-generating business.
Measured against the founder's own philosophy that only social contribution may run at a loss, the Regional Revitalisation & Tourism business — which has recorded cumulative operating losses of approximately ¥19bn since becoming a standalone segment — ought properly to be a candidate for fundamental review.
Undertake a fundamental review of the Regional Revitalisation & Tourism business, whose cumulative losses continue to build.
If not management for shareholders' value — then what?
We believe that the board should pursue sustainable corporate value and shareholders' value while discharging its duties to the company and complying with applicable law. For a listed company, disciplined capital allocation and appropriate shareholder returns are central to that responsibility. We look to Pasona's directors to approach the company's management from the standpoint of enhancing shareholders' value. The record to date is set out in Exhibits 17 and 18: TSR has moved in negative territory in absolute terms and has underperformed the index substantially, with most of the underperformance arising after the announcement of the change of president on 14 April 2025.
Where such management proves difficult, taking the company private is also one of the available options. A take-private can be a legitimate strategic alternative, provided that the process is independent and the consideration fairly reflects the company's value.
And where neither the pursuit of a management policy aimed at enhancing shareholders' value nor consideration of a take-private is possible, we ask that directors capable of advancing shareholders' value be brought in — and that the current directors promptly resign.
A record of private engagement before public request.
Since February 2025 we have written to Pasona's leadership seven times. Each letter is available in full (PDF, Japanese and English).
Exhibits 1–18: every figure, chart and quotation, with its source.
The exhibits below present in English the evidence shown on the Japanese campaign page, keeping the same numbering. Charts are rebuilt from the same underlying data. Translations of quoted Japanese sources are our own unofficial translations; in the event of any inconsistency, the Japanese original prevails.
Key evidence: Exhibit 1 · Exhibit 2 · Exhibit 8 · Exhibit 14 · Exhibit 18 — all exhibits are shown open below; use “Collapse all” to browse the headings only.
Exhibit 1A distorted balance sheet
Equity has grown enormous relative to the market capitalisation and to net cash.
Net cash: cash and equivalents less interest-bearing debt and deposits received. Equity ratio: 56.0% on a basis excluding deposits received on entrusted engagements. Financial data as at end-May 2026; market capitalisation as at the 27 July 2026 close.
Exhibit 2Estimating the Value of Operations
We calculate Pasona's Value of Operations at ¥40.7bn.
Supplementary note: the Value of Operations is estimated by deducting non-operating assets from enterprise value (the sum of market capitalisation, interest-bearing debt and deposits received). Non-operating assets are taken as surplus cash — cash less operating cash. Operating cash is calculated by applying 7.3%, the first quartile of Pasona's cash-to-revenue ratio since listing, to Pasona's full-year FY5/2027 company-plan revenue.
Exhibit 3The P/B ratio, illustrated
Share price divided by book value per share sits at a strikingly low level.
Outer ring: book value per share (¥3,397). Inner ring: share price (¥1,575). As at the 27 July 2026 close.
Exhibit 4Share-price performance
The share price has trended soft.
Supplementary note: the share price since 8 February 2024, when Dai-ichi Life Holdings' agreement to a tender offer for Benefit One was announced.
Data summary: 8 Feb 2024 – 27 Jul 2026; start ¥2,730, end ¥1,575 (closing prices).
Exhibit 5The equity-spread framework
Where ROE and the cost of equity are at the same level, P/B is valued at 1×.
(assuming a cost of equity of 8%)
the cost of equity
e.g. 10%
8%
This diagram is illustrative rather than a general valuation identity. It assumes, among other things, a stable return profile and abstracts from growth, payout and changes in the equity base.
Exhibit 6How a valuation below 1× book arises
Even where current ROE is high, if only low returns are expected and future ROE is seen as declining, P/B falls below 1×.
(assuming a cost of equity of 8%)
e.g. 2%
(below the cost of equity)
- Pouring funds into businesses with no prospect of a return
- Donations that do not contribute to the development of the business
- Hoarding cash as retained earnings, deployed neither in investment nor in shareholder returns
Exhibit 7From the published writing of Mr Yasuyuki Nambu
Securing profit and giving back to society, together, is precisely the duty that a joint-stock company's directors must discharge.
“A company, like a vehicle, moves forward on the two wheels of ‘profit’ and ‘giving back to society’. Going public means ‘serving the public good’ […] A business that merely pursues profit, or aims only at expanding the company's scale, may become a momentary bestseller, but it will not become a long-seller. Only a company that fulfils a clear role in the world possesses a social reason for being, and can long remain needed by society as a long-seller […]”
Source: Kono Yubi Tomare (Yasuyuki Nambu, 2001), pp. 16 and 63. Our unofficial translation.
Exhibit 8Disclosure of the related-party transaction (the donation)
The company also explains: “The amount of the donation to the Pasona Professional Graduate School Establishment Preparation Foundation is determined on the basis of resolutions of the board of directors of our subsidiary.”
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| Category | A foundation whose representative director is an officer of the company or a close relative of an officer |
| Name of entity | Pasona Professional Graduate School Establishment Preparation Foundation (a general incorporated foundation) |
| Location | Awaji City, Hyogo Prefecture |
| Description of activities | The foundation's stated purpose is to establish a graduate-school university dedicated to developing people who can contribute to attractive regional development by drawing on the resources distinctive to each region — its natural environment, history, culture and food. |
| Nature of transaction | Donation |
| Transaction amount | ¥680 million |
Source: 17th-term annual securities report, p. 120 (PDF page 123). Our unofficial translation of the disclosed items.
Exhibit 9The disclosure timeline of the related-party transaction (the donation)
The information on the donation had not been disclosed before the general meeting.
Exhibit 10Why related-party transactions warrant scrutiny
Tokyo Stock Exchange, Inc. does not tolerate related-party transactions lacking discipline.
“Transactions involving management (such as deals won or planned by managers themselves, or deals exceptionally approved by managers) are, in general, less amenable to internal checks and carry a risk of leading to misconduct. We therefore confirm whether an appropriate framework is in place so that such transactions, too, are examined on an organised basis with checking functions brought to bear, and whether transactions actually undertaken were free of impropriety.”
Source: New Listing Guidebook 2024 (Prime Market edition), p. 56. Bold and underlining added by Nanahoshi. Our unofficial translation.
Exhibit 11Pasona's medium-term management plan at a glance
The ROE target of 8% appears to be benchmarked to the 8% cost of equity that Pasona itself has disclosed.
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| Actual FY5/2026 |
Target FY5/2030 |
Change | Our calculation Average p.a. |
|
|---|---|---|---|---|
| Revenue | ¥308.5bn | ¥400.0bn | 1.3× | +6.7% |
| BPO Solutions (note 1) | ¥132.9bn | ¥170.0bn | 1.3× | +6.3% |
| Regional Revitalisation & Tourism Solutions | ¥8.3bn | ¥20.0bn | 2.4× | +24.6% |
| Other | ¥167.3bn | ¥210.0bn | 1.3× | +5.9% |
| Profit | Ordinary profit ¥0.14bn | Ordinary profit ¥20.0bn (5% margin) | c. +¥19.9bn | – |
| Company-wide cost-to-revenue ratio | 4.7% | 3.5% or below | Improvement of 1.2pt or more | – |
| BPO Solutions | Gross margin 22.7% | 24% | Gross profit 1.4× (note 2) | – |
| Regional Revitalisation & Tourism Solutions | Operating profit −¥1.5bn | ¥2.0bn | Return to profit | – |
| Other | – | (note 3) | – | – |
| ROE | – (note 4) | 8% | Substantial improvement | – |
| Net profit | −¥3.4bn | Not disclosed | – | – |
| Equity | ¥126.9bn | Not disclosed | – | – |
Note 1: “BPO Solutions” abbreviates business process outsourcing; the segment naming follows Pasona's medium-term-plan materials.
Note 2: the 1.4× gross-profit multiple for FY5/2030 is calculated as ¥40.8bn ÷ ¥30.17bn. The numerator is the FY5/2030 revenue target of ¥170.0bn × the 24% gross-margin target = ¥40.8bn; the denominator is FY5/2026 revenue of ¥132.928bn × the 22.7% gross margin = ¥30.17bn.
Note 3: FY5/2030 ordinary profit is estimated at ¥20.0bn by applying a 5% ordinary margin to the ¥400.0bn revenue target. Against this, adding to FY5/2026 ordinary profit of ¥0.14bn the increase in BPO Solutions gross profit of c. ¥10.6bn, the improvement in Regional Revitalisation & Tourism operating profit of c. ¥3.5bn and company-wide cost reductions of c. ¥0.6bn yields c. ¥14.9bn. We estimate that the difference of c. ¥5.1bn from ¥20.0bn is attributable to profit growth in Other businesses and other factors. This is our estimate based on the disclosed targets, not the company's own breakdown of its profit plan.
Note 4: FY5/2026 recorded a net loss attributable to owners of the parent, so ROE is negative and is not shown.
Source: our compilation from Pasona's medium-term management plan (17 July 2025, PDF, Japanese) and disclosed results.
Exhibit 12Assessing “build-up” versus “backcast” medium-term plans
The backcast approach — a strategy constructed by working backwards from the desired future state — is regarded as preferable.
“To convey future growth potential to investors, it is desirable that the medium-term management plan be formulated by backcasting from a long-term strategy that includes a vision of the future; among companies, however, there are also cases in which the medium-term plan is built up from the business divisions.”
Source: Ministry of Economy, Trade and Industry, “Roundtable on the Sustained Enhancement of Corporate Value (Interim Report by the Chair)” (26 June 2024), p. 12. Our unofficial translation.
Exhibit 13The status of a medium-term plan
A medium-term plan is regarded not as a mere plan, but as one of the commitments made to shareholders.
“[Principle 4-1. Roles and Responsibilities of the Board (1) — Supplementary Principle 4-1(2)] The board and senior management should recognise that a medium-term business plan is also one of the commitments made to shareholders, and should do their best to achieve it. Should the plan end in underachievement, they should fully analyse the causes and the responses the company took, explain them to shareholders, and reflect that analysis in subsequent plans.”
Source: Tokyo Stock Exchange, Inc., Corporate Governance Code (11 June 2021). Our unofficial translation.
Exhibit 14The “procedure” and the “substantive decision” in the selection of the president — which came first?
Viewed chronologically, there is a suspicion that a de facto decision by the founder preceded the procedure by which the company resolved the appointment.
Note: under the company's explanation, the selection procedure took place on 14 April; according to the report, the founder's de facto communication came two days earlier. The founder's substantive decision would therefore have preceded the board's resolution.
Exhibit 15Excerpt from the Family Governance Guidance Checklist
The 44-item checklist classifies items as “Recommended” (particularly important matters), “Important” (important matters) and “Optional” (possible options).
- ImportantThe scope and role of the family's involvement in management — where it begins and where it ends — are clearly defined.
- RecommendedHow the family, as shareholders, will engage — for the growth of the family business — in shareholder proposals, the exercise of voting rights and the like is made clear.
- RecommendedA succession policy for the family has been formulated.
- RecommendedA business-succession plan is formulated at an early stage, and the succession policy and the outlook for selecting and developing successor candidates are communicated internally and externally.
- RecommendedThe qualities and experience required of a successor, the selection process and criteria, and a development plan are established in advance.
- ImportantIn selecting a successor, both candidates from within the family and other employees are considered as serious options.
- ImportantNecessary information is disclosed to family shareholders and to employees, local communities, business partners and other stakeholders, resolving information asymmetries and thereby securing transparency.
Source: Ministry of Economy, Trade and Industry, Family Governance Guidance (5 June 2026) — checklist excerpt. Our unofficial translation.
Exhibit 16The founder's philosophy, and the contradiction of the Regional Revitalisation & Tourism business
A management philosophy that distinguishes business from social contribution — and secures profit in business.
“What we do as business and what we do as social contribution are clearly different things.”
Exhibit 17Pasona's total shareholder return since 8 February 2024, when Dai-ichi Life Holdings' agreement to a tender offer for Benefit One was announced
In absolute terms the return has moved in negative territory; against the index, it has underperformed substantially.
Dashed line: absolute TSR (Pasona). Solid line: relative TSR (Pasona − TOPIX including dividends), in percentage points. Dividend-inclusive TOPIX is presented on an after-tax basis, and Pasona’s dividends are recalculated on the same after-tax basis for comparability. Our calculation to 27 July 2026.
Data summary: 8 Feb 2024 – 27 Jul 2026; absolute TSR −35.3%; relative to dividend-inclusive TOPIX −102.2 percentage points (after-tax dividend basis; our calculation).
Exhibit 18Total shareholder return since the announcement of the change of president (14 April 2025)
The greater part of the underperformance seen in Exhibit 17 arises in this period.
Supplementary note: total shareholder return is a share-price measure that removes the effect of shares going ex-dividend. Dividend-inclusive TOPIX is on an after-tax basis, and Pasona's dividends are likewise recalculated after tax for the comparison. Our calculation to 27 July 2026.
Data summary: 14 Apr 2025 – 27 Jul 2026; absolute TSR −15.5%; relative to dividend-inclusive TOPIX −82.4 percentage points (after-tax dividend basis; our calculation).
Q&A on the shareholder proposal.
Seventeen questions and answers on the mechanics and intent of the proposal, as published on the Japanese campaign page.
The proposal in outline
The proposal asks Pasona, in light of the governance risks that accompany the presence of the founding-family shareholders, to formulate and disclose a “Family Governance Basic Policy”.
If Pasona formulates and discloses the prescribed Basic Policy, no acquisition of own shares takes place. If the prescribed Basic Policy is not formulated and disclosed, the board of directors will consider and resolve to buy shares from the founding-family shareholders, and own shares will be acquired with the founding-family shareholders' agreement.
The principal purpose of the proposal is to reduce the founding-family shareholders' influence, raise the transparency of the company's management, and secure the protection of minority shareholders.
The condition is met where, within three months of the close of this year's general meeting, the board of directors resolves a “Family Governance Basic Policy” and discloses it in the corporate-governance report, through timely disclosure, or on the company's website.
The Basic Policy must, however, include at least all five of the following items:
- Matters securing the objectivity of the selection of representative directors and the nomination of director candidates;
- That Pasona confirm with the founding-family shareholders their policies on the exercise of voting rights, involvement in Pasona's management and the holding of Pasona shares, and disclose the results;
- A succession plan for the representative director(s) and other key executives;
- Measures to protect minority shareholders in light of the presence of the founding-family shareholders; and
- The results of Pasona's self-assessment of its family governance based on the “Family Governance Guidance Checklist” published by METI, or equivalent materials.
Unless a Basic Policy containing all five items is disclosed, the lapse condition in the proposal is not satisfied and the authorisation for the acquisition of own shares does not lapse.
It would not.
It is not sufficient under the proposal simply to disclose a document bearing the title “Family Governance Basic Policy”. The Basic Policy must include all five items specified in the shareholder proposal.
Accordingly, where, for example, it is not made clear that the selection of representative directors and the nomination of director candidates will not be determined solely by the wishes of a particular shareholder or its related parties, or where no procedure is included for confirming and disclosing the founding-family shareholders' policies on the exercise of voting rights, involvement in management and shareholding, we consider that the lapse condition of the proposal would not be satisfied.
No.
If Pasona formulates and discloses a Basic Policy with the prescribed content within three months of the close of this year's general meeting, no acquisition of own shares takes place.
The proposal is not intended to compel the founding-family shareholders unilaterally to sell their shares. Its purpose is to make transparent the governance risks that accompany the founding-family shareholders' presence, and to clarify the measures protecting minority shareholders.
Scope of the founding-family shareholders and the confirmation procedure
In the proposal, “founding-family shareholders” means the founder, the founder's close relatives (relatives within the second degree of kinship), and corporations and other entities in which the founder and such relatives hold a majority of the voting rights. Asset-management companies and trusts are included.
The proposal asks for a procedure under which Pasona confirms with these founding-family shareholders their policies on the exercise of voting rights, involvement in Pasona's management and the holding of Pasona shares, and discloses the results.
The proposal requires that, where there are matters Pasona has been unable to confirm with the founding-family shareholders, Pasona disclose that fact and the reasons for it.
Accordingly, if the founding-family shareholders decline to confirm their policies, Pasona should disclose the matters it was unable to confirm and the reasons why.
What matters is securing sufficient transparency — about the founding-family shareholders' exercise of voting rights, involvement in management and shareholding policies — for shareholders other than the founding-family shareholders to be able to form a judgement.
What the Basic Policy must contain
At Pasona, the founding-family shareholders hold a large share of the voting rights, and individuals from the founding family also serve as directors.
In these circumstances, whether representative directors are selected and director candidates nominated on the basis of objective, pre-established criteria — or are strongly swayed by the wishes of a particular shareholder or its related parties — is an important question for minority shareholders.
The proposal calls for a Basic Policy that includes a statement that the selection of representative directors and the nomination of director candidates will not be determined solely by the wishes of a particular shareholder or its related parties.
A succession plan for the representative director(s) and other key executives is an important governance matter, directly linked to a company's sustained growth and to the enhancement of shareholders' value.
In a company where the founding-family shareholders wield significant influence, in particular, whether successors are chosen on objective criteria and through an appropriate process is important information for minority shareholders' judgement.
The proposal asks that the succession plan for the representative director(s) and other key executives be included in the Basic Policy, raising the transparency of successor selection.
The proposal requires that measures to protect minority shareholders, in light of the presence of the founding-family shareholders, be included in the Basic Policy.
The specific content is a matter for Pasona to consider. By way of example, procedures could be established to secure independence, objectivity and transparency in relation to transactions in which conflicts of interest with the founding-family shareholders or their related parties may arise, donations, social-contribution expenditure, significant capital-allocation decisions, senior management appointments and the like.
These are, however, no more than examples of minority-shareholder protection measures. What the proposal makes mandatory is that “measures to protect minority shareholders in light of the presence of the founding-family shareholders” be included in the Basic Policy.
Related-party transactions and donations are not enumerated as free-standing mandatory items of the Basic Policy in the proposal.
That said, in a company where the founding-family shareholders wield significant influence, whether independence, objectivity and transparency are adequately secured in relation to related-party transactions, donations, social-contribution expenditure and other uses of funds is important from the standpoint of minority-shareholder protection.
We therefore consider it desirable that, in formulating the Basic Policy, Pasona clarify procedures for related-party transactions, donations and the like, as part of the minority-shareholder protection measures that accompany the presence of the founding-family shareholders.
The proposal asks Pasona to assess the state of its own family governance based on the “Family Governance Guidance Checklist” published by METI, or equivalent materials, and to disclose the results.
What matters is that Pasona examine its own situation objectively, and set out clearly for shareholders the governance risks that accompany the founding-family shareholders' presence, together with its policy for addressing them.
Mechanics of the buy-back and the impact on shareholders
As set out above, the purpose is to reduce the founding-family shareholders' influence, raise the transparency of the company's management, and promote the protection of minority shareholders. Beyond that, a further purpose of the proposal is to ask Pasona to formulate and disclose a Family Governance Basic Policy.
If, however, Pasona does not formulate and disclose the prescribed Basic Policy, the governance concerns that accompany the founding-family shareholders' presence remain unresolved. In that case, as the proposal provides, acquiring own shares from the founding-family shareholders is intended to reduce their influence, and thereby to serve minority-shareholder protection and the enhancement of shareholders' value.
No.
Under the proposal, no premium attaches to the acquisition price. The acquisition price is, in principle, the lower of the market price on the day before the date of the general meeting and the market price on the day before the acquisition agreement is signed.
The proposal therefore confers on the founding-family shareholders no special benefit above the market price.
The proposal does not buy shares held by the founding-family shareholders at a premium.
If Pasona formulates and discloses the prescribed Basic Policy, no acquisition of own shares takes place. If the Basic Policy is not formulated and disclosed, own shares are acquired from the founding-family shareholders at or below the market price.
The proposal is accordingly designed to resolve or reduce the governance concerns that accompany the founding-family shareholders' presence, and to serve minority-shareholder protection and the enhancement of shareholders' value; we do not consider that it disadvantages shareholders other than the founding-family shareholders.
An acquisition of own shares under the proposal takes place only where Pasona does not formulate and disclose the prescribed Basic Policy.
In addition, no premium attaches to the acquisition price, which is at or below the market price; and any acquisition of own shares must be carried out within the distributable amount under the Companies Act.
The proposal is therefore not aimed at causing an unjustified outflow of company funds; it is designed as a response for the case in which the governance concerns accompanying the founding-family shareholders' presence remain unresolved.
To shareholders
No.
The proposal does not deny the founding-family shareholders' existence as such. Even in a company with founding-family shareholders, where highly transparent family governance is in place and minority shareholders' interests are properly protected, the family's involvement can at times contribute to the company's growth.
What the proposal seeks is to clarify the founding-family shareholders' exercise of voting rights, involvement in management, shareholding policy, succession planning, minority-shareholder protection measures and the like — securing transparency sufficient for shareholders other than the founding-family shareholders to form an appropriate judgement.
The proposal asks Pasona to articulate the governance risks that accompany the founding-family shareholders' presence, and to disclose the measures protecting minority shareholders.
If Pasona formulates and discloses the prescribed Basic Policy, no acquisition of own shares takes place. The proposal is therefore, first and foremost, a call for greater transparency and improved governance.
For shareholders who value the enhancement of Pasona's shareholders' value, management informed by the cost of capital, objectivity in the selection of successors, transparency in the company's relationship with the founding-family shareholders, and the protection of minority shareholders, we believe the proposal is one that merits support.
What we ask of the board.
Each request below follows from the analysis and evidence above. None requires anything more exotic than management that takes the cost of capital seriously.
- Invest only where expected risk-adjusted returns exceed the relevant cost of capital; otherwise, return surplus capital to shareholders, at around an 8% dividend on equity (DOE).
- Revise the medium-term management plan: re-examine each segment's positioning from the standpoint of business-portfolio restructuring, add specific and quantitative explanation, and formulate a new plan that serves the enhancement of shareholders' value.
- Submit a board-sponsored proposal on the appropriation of surplus, including the dividend, to the AGM.
- Make no donations to related parties, and undertake no opaque related-party transactions — disclose any transaction whose merit can be verified from a cost-of-capital standpoint, and do not undertake transactions that cannot be so verified.
- Disclose the annual securities report at least two weeks before the date of the general meeting.
- Adopt and disclose a Family Governance Basic Policy containing all five required items, and reflect the intent of METI's guidance in the company's governance framework.
- Undertake a fundamental review of the Regional Revitalisation & Tourism business, whose cumulative losses continue to build.
If the board will not adopt a management policy aimed at enhancing shareholders' value, it should withdraw from the stock market through a take-private — after preventing an unduly low price for the shares.
If it will not go private, the current directors should resign and be replaced by directors who will manage for the enhancement of shareholders' value.
The shareholder proposal before the AGM on 28 August 2026 asks, in the end, for one of two outcomes: the adoption and disclosure of a qualifying Family Governance Basic Policy containing all five required items, or a potential reduction, at no premium, of the founding-family shareholders' stake through a buy-back. We believe that either outcome would contribute to enhancing shareholders' value.