Electric power companies will face stronger doubts among shareholders about the feasibility of continuing with nuclear energy at annual meetings scheduled for later this month.
Electric power companies will face stronger doubts among shareholders about the feasibility of continuing with nuclear energy at annual meetings scheduled for later this month.
In particular, executives of the Tokyo Electric Power Co. will likely face serious criticism over the accident at its Fukushima No. 1 nuclear power plant.
The Japan Proxy Governance Institute compiled its recommendations to TEPCO shareholders on June 17, and urged shareholders to vote for a proposal to be submitted at the June 28 shareholders' meeting calling on the company to move away from nuclear energy.
The proposal calls on TEPCO to shutdown and decommission reactors from the oldest ones now operating and to not construct new plants or add more reactors.
Yoji Yoshioka, JPG head, giving reasons for supporting the proposal said, "Nuclear energy operations are now too risky for just a single private-sector company to continue with."
At least two-thirds of shareholders attending the meeting have to vote for the proposal in order for it to be approved.
JPG is also recommending that shareholders vote against a proposal that would re-elect 16 company board members.
Under the personnel plan to be submitted by TEPCO, Masataka Shimizu will step down as president, but 16 other board members, including Chairman Tsunehisa Katsumata, are up for re-election.
JPG is recommending that shareholders vote against the re-election of all 16 incumbent board members
Proposals from shareholders to move away from nuclear energy have also been submitted to meetings for five other electric power companies.
Such proposals have been frequently submitted in the past and have always been voted down by huge margins.
However, the Fukushima accident has sent stock prices of electric power companies tumbling and shareholders are increasingly more sensitive about the future of nuclear energy.
A group of 93 citizens is calling on Chubu Electric Power Co. to close its Hamaoka nuclear power plant. All reactors there have stopped operating in response to a request from Prime Minister Naoto Kan made after the Fukushima accident.
"We have received phone calls and e-mail messages this year from shareholders who are total strangers," said Tomoko Anraku, one of the leaders of the group.
The group has submitted similar proposals asking Chubu Electric to move away from nuclear energy for close to 20 years, but none have passed, with votes in favor only reaching about 5 percent.
TEPCO faces a proposal from 402 shareholders asking the company to abandon nuclear energy.
The proposal itself is similar to ones submitted in the past, but the opposing argument presented by TEPCO this year does not include any wording on the significance or safety of nuclear energy as had been the case in the past.
A TEPCO official explained the difference by saying, "We will consider the future status of nuclear energy after obtaining the results of the investigation into the accident and after discussions on the nation's overall energy policy are completed. We will also take into consideration the opinions of local residents."
In the past, many shareholders have opposed proposals against nuclear energy on the grounds the issue was not something that should be decided at shareholders' meetings since nuclear energy was national policy.
However, there may be a change of opinion because of the Fukushima accident.
Mariko Kawaguchi is an executive with the Social Investment Forum Japan, a nonprofit organization made up of business executives.
"The risks of nuclear energy have rapidly emerged," Kawaguchi said. "Investors will also have to start thinking about the significance and problem areas associated with nuclear energy as a subject for investment."
While all the electric power companies facing proposals on nuclear energy will likely face criticism, TEPCO executives also are worried about their own future.
Regarding the proposal to re-elect 16 board members, an official with an asset management company said, "It will be impossible to vote for that proposal this year. We plan to vote against it."
At last year's shareholders' meeting, the proposal on electing board members was approved by about 95 percent of shareholders. However, the official of the asset management company said there was the possibility the proposal could be voted down this year.
For that reason, TEPCO officials have been busy visiting institutional investors and explaining why the board members should be re-elected.
Individual investors are also an important factor because many hold shares in electric power companies because of the low risk of bankruptcy.
As of March 2010, TEPCO had about 790,000 individual investors and their combined holdings represented about 38 percent of all outstanding TEPCO shares. That is a much higher figure than the approximately 25 percent average for all companies.
TEPCO officials are preparing about 5,600 seats for the Tokyo hotel where this year's meeting will be held. Normally, about 4,000 seats are set up for the meeting.