Activist hedge fund Palliser Capital has won a significant endorsement in its campaign to overhaul the board of Keisei Electric Railway, with proxy advisory giant Institutional Shareholder Services (ISS) recommending shareholders vote against six of the company’s board nominees, including CEO Toshiya Kobayashi, according to a report by Bloomberg.
ISS’s rare intervention in a Japanese proxy fight marks a major boost for UK-based Palliser, which has been pressuring Keisei for years to unlock shareholder value through governance reform and more disciplined capital allocation. In a report seen by Reuters, ISS stated Palliser has “made a compelling case that a governance overhaul at Keisei is necessary to restore trust in management.”
Keisei, which operates key rail lines connecting Narita Airport to central Tokyo, is facing heightened scrutiny ahead of its 27 June AGM. Palliser is calling for a reduction in board size from 15 to nine members, aiming to increase board agility and accountability. The fund is seeking to block the re-election of four incumbents—among them CEO Kobayashi—and two additional insiders. However, it has not opposed Takao Amano, who is expected to succeed Kobayashi as CEO when the latter moves to chair the board.
Palliser has argued that Keisei’s insider-dominated board has contributed to prolonged underperformance and a lack of shareholder responsiveness—issues increasingly central to activist hedge funds targeting Japan’s entrenched corporate governance culture.
Glass Lewis, another influential proxy advisor, echoed ISS’s concerns earlier this week by recommending shareholders vote against two directors, including Kobayashi.
