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ValueAct Issues Letter to Seven & i Holdings Shareholders


2023 Annual Meeting results show clear desire for change

Company has underperformed Nikkei since Meeting, reflecting investor disappointment with status quo

ValueAct renews call for independent and objective review of Company strategy and leadership

Calls on shareholders to observe Seven & i’s next capital markets communications to assess credibility of Board’s message for accelerated value creation and open mind about strategic options

SAN FRANCISCO, May 31, 2023 /PRNewswire/ — ValueAct Capital (“ValueAct”), a global investment firm that has been a major shareholder of Seven & i Holdings (“Seven & i” or “the Company”) since 2020, today issued the following letter to shareholders of Seven & i following the results of the Company’s 2023 Annual Meeting of Stockholders:

Dear Fellow Shareholder:

I hope this message finds you well. Over the past several months we have been in consistent communication with you regarding issues of governance, strategy and leadership at Seven & i. We sincerely thank all of you for your attention to engagement, stewardship, and voting during this critical period, including at the recent Annual Shareholders’ Meeting.

Although ValueAct’s board nominations did not reach majority support, the recent collaborative engagement process reaffirmed our belief that Seven & i must make significant changes to meet the expectations of stakeholders. In our meetings with fellow shareholders, we heard consistently that Seven & i’s status quo conglomerate structure is suboptimal and that the company has not sufficiently clarified its strategic and organizational approach to maximize the potential of its greatest asset, 7-Eleven. We also found consensus among shareholders regarding the significant room for improvement in culture, process and execution at the Board and management levels.

This desire for change was reflected in the voting results. The vote followed our recommendations for the shareholder nominees and against the Company’s nominees in a range from 23.6% – 35.1% of shares voted. Excluding the large contingent of allegiant shareholders, the proportion of shareholders voting for change was much higher.

We trust that the Board will reflect and respond accordingly to this level of shareholder dissent, and to the market reaction following the AGM results: Seven & i’s share price has underperformed the Nikkei 225 by ~9% in the 5 trading days since the AGM. Both the vote of non-allegiant shareholders and the market reaction signal that the capital markets support the pro-stakeholder, pro-shareholder mandate outlined during our campaign:

  • An independent review of leadership including the President and Board Chair roles;
  • An objective review of all alternative strategies and corporate structures;
  • The adoption of best-in-class governance culture and procedures to remove management bias from decision-making, embrace dissenting voices, and ensure a genuine dialogue with shareholders; and
  • A robust sustainability roadmap that leads by example.

In its statement following the AGM, Seven & i’s Board said: “…We will continue to listen to the input of all shareholders. The Strategy Committee, composed solely of independent outside directors, will continuously assess all options for value creation objectively, and the Board will focus on accelerating our business transformation with an open mind toward all options for value creation.”

We also understand that in the weeks leading up to the AGM, individual Seven & i Board members assured shareholders that they would drive substantive change on an accelerated timetable. We understand and respect the logic of shareholders who placed their trust in the Company’s nominees to drive change on the basis of such promises. Now, all shareholders—including ValueAct—are in a position to hold the entire Board of Directors accountable if these promises are not upheld in the months ahead. 

We believe shareholders will intently observe Seven & i’s next capital markets communications to assess whether or not members of management reinforce the Board’s message regarding an accelerated timetable for value creation and an open mind about strategic options. Similarly, we believe shareholders will expect an update on the Strategy Committee’s objective assessment process without delay. 

ValueAct looks forward to resuming private and constructive dialogue with the Board on the pro-stakeholder, pro-shareholder mandate that many shareholders supported, including objective assessments and decisions regarding strategic alternatives, leadership of the Board, and management.

Sincerely,

ValueAct Capital

About ValueAct Capital

ValueAct Capital, established in 2000, is a global investment firm managing capital on behalf of some of the world’s largest institutional investors. The Firm’s goal is to transform companies and help them become 21st Century Global Champions. VAC seeks to identify and invest in high-quality businesses that are temporarily under-valued, taking a patient, collaborative and constructive approach to value building for all stakeholders with long-term investments. ValueAct Capital’s internal team has built a track record serving on over 55 public company board seats. For more information, please see https://valueact.com.

CONTACT: [email protected]

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