Leading Proxy Advisory Firms Support Fir Tree�s Outside Director Candidates for JR Kyushu

Glass Lewis Recommends FOR all Three of Fir Tree’s Board Nominees – Fumiyo Takei, Daizo Motoyoshi and Yoshiko Nagao, and AGAINST the Reelection of Directors Masayoshi Nuki and Izumi Kuwano

ISS Recommends FOR Two of Fir Tree’s Three Board Nominees – Fumiyo Takei and Daizo Motoyoshi, and AGAINST the Reelection of Directors Izumi Kuwano and Kazuhide Ide

Advisors Highlight the Need for Related Industry Expertise and Independent Oversight on the Board

Fir Tree Encourages Shareholders to Vote FOR Agenda Items 4, 5, 6, 7 and AGAINST Items 2.7 and 2.8

NEW YORK & TOKYO–(BUSINESS WIRE)–Fir Tree Partners (“Fir Tree”), manager of certain funds that reported collective beneficial ownership of approximately 6.1% of the outstanding shares of Kyushu Railway Company (“JR Kyushu” or the “Company”) (TSE ticker 9142) on its latest large shareholding report, today announced that both leading proxy advisory firms, Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”), have recommended that shareholders support Fir Tree’s outside director candidates at JR Kyushu’s Annual General Meeting of Shareholders (“Annual Meeting”) to be held on June 23, 2020.

ISS and Glass Lewis both cited the need for relevant industry skills and additional independence on the Board of JR Kyushu, especially considering the impact of the global health crisis. Glass Lewis has recommended shareholders vote in favor of all three of Fir Tree’s independent director nominees (Ms. Takei, Mr. Motoyoshi and Ms. Nagao) and against two incumbent directors (Ms. Kuwano and Mr. Nuki). ISS has recommended shareholders vote in favor of two of Fir Tree’s independent director nominees (Ms. Takei and Mr. Motoyoshi) and against two incumbent directors (Ms. Kuwano and Mr. Ide).

In its report, Glass Lewis concluded¹:

• “…JR Kyushu may have had little legitimate interest in considering Fir Tree’s candidates beyond simple optics management. Instead, it appears the Company was more interested in cycling through a preamble of nominal governance gestures before advancing yet another independent candidate ill-equipped to fully evaluate the still simmering strategy and performance issues raised at the 2019 meeting, or the withering implications of COVID-19…”

• “…[W]e believe there is ample cause to support Fir Tree’s nominees, which appear to offer considerably greater skill, expertise and independence than certain of JR Kyushu’s incumbent nominees.”

• “We thus consider the Company’s slate, as presently structured, demonstrates a yawning absence of truly independent, strategically-focused oversight at an especially vulnerable juncture.”

• “JR Kyushu continues to maintain a policy which establishes any investor submitting affirmative votes in relation to a number of candidates collectively exceeding the maximum number of non-audit committee seats – which is to say, a total of twelve – will have all such votes invalidated. While we have no cause to conclude or even imply this policy clearly violates any given regulation, we do believe JR Kyushu’s stance clearly has the effect of complicating a contested scenario by allowing the Company to unilaterally invalidate those ballots which would seem to necessarily codify some meaningful departure from management’s preferred outcome.” 

In its report dated June 5, 2020, ISS stated:

• “We note that Fumiyo Takei brings real estate investing and financing experience from two listed companies; her addition would also contribute to gender diversity on the board. Daizo Motoyoshi brings an investor perspective to the board given his background as portfolio manager. Given how critical real estate and capital allocation is for the Company, this appears as a reasonable solution to ensure proper evaluation of capital allocation alternatives by independent members of the board.”

• “We recommend a vote against management nominee Izumi Kuwano (agenda item 2.8), one of the longest serving independent directors on the board, whose prior experience appears to be limited to managing a small hotel company.”

Tim Laurie, Investment Analyst at Fir Tree, stated:

“We are pleased that both leading proxy advisory firms recognize and agree with the need for truly independent directors who possess the relevant industry skill and expertise, oversight ability and added diversity which JR Kyushu’s Board desperately needs at this crucial time – especially as the Company faces additional challenges caused by Covid-19.”

“In addition, as emphasized by ISS and Glass Lewis, we find JR Kyushu’s last-minute decision to reject all our potential independent director candidates after a prolonged interview and negotiation period, to be disingenuous and representative of management’s unwillingness to honestly listen to shareholders. Furthermore, the decision by the Board and management to leave a board seat empty and nominate yet another outside director lacking relevant industry expertise at this critical juncture, reinforces the need for more oversight and enhanced decision-making ability at the Board level.”

Although both ISS and Glass Lewis ruled against Fir Tree’s specific proposal (agenda item 4) for improved disclosure relating to JR Kyushu’s real estate business and capex spending, both proxy advisors did acknowledge further disclosure would be beneficial in helping investors assess the long-term value of the Company. Glass Lewis specifically states: “we are inclined to take the view that such transparency is, for now, better sought through informed discussion within a materially reconstituted board room, inclusive of Fir Tree’s nominees, rather than through a binding shareholder proposal which would necessarily front-run the board-level input and oversight of those very nominees.”

As JR Kyushu’s 2020 Annual Meeting is quickly approaching, we encourage fellow shareholders to vote FOR our three independent and highly qualified director nominees, Ms. Fumiyo Takei (agenda item 5), Mr. Daizo Motoyoshi (agenda item 6) and Ms. Yoshiko Nagao (agenda item 7).

In order to vote in favor of all three of Fir Tree’s Board candidates, we recommend shareholders vote AGAINST the reelection management nominees Masayoshi Nuki (agenda item 2.7) and Izumi Kuwano (agenda item 2.8), given their incompatible skill sets to JR Kyushu’s businesses, poor track record as value creators and questionable independence.

For more information including a detailed presentation outlining Fir Tree’s proposals, please visit www.ABetterWayforJRK.com.

About Fir Tree Partners

Fir Tree Partners, founded in 1994 and located in New York City (HQ) and Miami, is a value-oriented investment manager that invests on behalf of endowments, charitable and philanthropic foundations, pension funds and other institutional and private investors. The firm has successfully applied its opportunistic approach across a wide array of asset classes, industries and geographies, including in Japan where it has been actively investing for nearly a decade. Fir Tree Partners has adopted Japan’s Stewardship Code.

Important Notice

This press release should not be construed as asking for an agreement on Fir Tree’s proposals or soliciting any person to authorize Fir Tree or any third party to exercise voting rights on such person’s behalf with respect to the election of directors of JR Kyushu or any other matter to be presented to shareholders at JR Kyushu’s upcoming Annual General Meeting (the “AGM”). Fir Tree intends to encourage fellow shareholders to cast their votes against certain proposals by JR Kyushu and in favor of Fir Tree’s proposals by either attending the AGM or using the voting card enclosed with the convocation notice that will be sent by JR Kyushu. This press release is not intended and should not be considered to solicit, encourage, induce or seek for fellow shareholders to authorize Fir Tree or any other third party as their proxy in exercising their voting rights on their behalf.

This press release is based solely on Fir Tree’s own analysis and the information made publicly available by JR Kyushu.

¹ Permission to quote Glass Lewis and ISS was neither sought nor obtained.

Contacts

Media

In Japan:
Dan Underwood

Ashton Consulting

+81 3 5425-7220

FTPR@ashton.jp

In the United States:
Sloane & Company

Dan Zacchei / Joe Germani

dzachei@sloanepr.com / jgermani@sloanepr.com