Governance engagement case study - River and Mercantile Asset Management
Alliance Trust had an allocation to Nintendo from the appointment of Willis Towers Watson until 30 September 2020.
Area of engagement
EOS began engaging with Nintendo on gender diversity on its board in 2016 and on board independence in 2017 with the head of legal and company secretary, meeting eight times between 2016 and 2020. The board was composed only of men of Japanese nationality. Although it has progressed board independence from a 100% insider board in 2013 to 33% since 2016, there remains room for improvement. EOS’ concern was accentuated by the fact that the company did not have a nomination committee, adding opacity to the nomination process. They encouraged the company to carry out an independent board evaluation and strengthen the search for female candidates.
Following EOS' engagement, Nintendo carried out its first self-evaluation of the board in 2016 and promised to consider an external board evaluation. The company is working towards strengthening its talent management programme to establish a pipeline of senior female executives, which it expects to take 10 years from 2017. Following EOS’ vote against the president in the 2019 AGM and further engagement later in the year to accelerate change in board composition, the company announced that it is establishing a nomination advisory committee in January 2020 – three out of the five directors are outside directors. In May 2020, the company also announced that it will appoint a woman to the board for the first time. EOS are pleased with the appointment and encouraged the company to improve disclosure of the nomination process and to publish the Terms of Reference of the nomination advisory committee so that investors can better understand the company’s working objectives and accountability towards selecting board members, given that it has traditionally relied on the president to nominate candidates. EOS continue to engage as their expectations for diversity of a board go beyond appointment of one female director.
Find out more