/ 28 June 2011

Tepco board feels heat at AGM

Tepco Board Feels Heat At Agm

The utility at the heart of Japan’s nuclear crisis, Tokyo Electric Power Company, faced pressure on Tuesday from angry shareholders to shut all its reactors in a sign of growing Japanese opposition to nuclear energy.

Activist shareholders may struggle, however, to convince long-term institutional investors, which own most of the stock, to approve a resolution to abandon atomic energy. Daiichi Life Insurance is the biggest shareholder of Tepco, as the company is known.

Many shareholders at a rowdy annual general meeting in Tokyo heaped scorn on the utility’s executives over their handling of the March disaster at the Fukushima nuclear plant and the company’s subsequent slide to near bankruptcy.

In May, Tepco reported an annual loss of $15-billion and since the disaster, its shares have plummeted 85%, its corporate rating has fallen to junk status and $36-billion has been wiped off the company’s market value.

“They’re going to have to give up nuclear power in the next few years. Construction of new plants is going to be impossible,” said a 37-year-old man from Nagano, who asked not to be identified.

Security was tight on Tuesday as shareholders and protesters converged on the Prince Park Tower Hotel in central Tokyo.

The meeting started with thousands of stockholders packed into the venue and several hundred unable to find seats. The vote on the anti-nuclear proposal is expected later on Tuesday.

The binding resolution, which requires a two-thirds majority vote to be approved, asks that the utility scrap its nuclear reactors. It does not give a timeframe.

Although put forward annually by anti-nuclear activist shareholders, the proposal this year takes on greater resonance with radiation still escaping from damaged reactors at the utility’s plant in Fukushima, 240km north of Tokyo.

Three reactors went into meltdown after a massive earthquake and tsunami hit the plant on March 11, forcing 80 000 residents to evacuate as engineers battled radiation leaks, hydrogen explosions and overheating fuel rods. The earthquake and tsunami left nearly 24 000 people dead or missing.

The utility’s chairperson, Tsunehisa Katsumata, opened the meeting with an apology.

“We’re working to get out of this crisis as quickly as possible,” he said to scattered applause and one angry stockholder who shouted at the board members.

Katsumata paused before answering hundreds of written questions from shareholders as one woman, who appeared on the verge of tears, shouted out that he should have quit on March 11.

One attendee suggested the board “jump into the reactors and die”, before being forced by security guards to sit down. Another said the board would have been forced to perform ritual disembowelment had they lived in Japan’s feudal era of samurai warriors.

Not every shareholder supported the motion to abandon nuclear power.

“It’s a difficult choice, but I don’t think Japan can make it without nuclear power,” said a 50-year-old man from Yokohama, who bought one share in late March so he could join the meeting. “The power shortages we had in March showed that. We have to be more like France than Germany.”

Can Japan do without nuclear power?
Nuclear power supplied 20% of Japan’s power in May, down from 30% before the earthquake and tsunami. Already, 35 of Japan’s 54 nuclear reactors are shut.

“The question is, can Japan do without nuclear power?” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. “How much are the Japanese people willing to sacrifice in terms of standard of living?

“The sentiment is understandable,” Akino said, “but the reality is that this is difficult without considerable sacrifice to economic growth and activity”.

New boss
Among groups intent on voicing their anger at Tepco, was Greenpeace, which asked demonstrators to meet in front of the hotel as shareholders arrived.

Shareholders on Tuesday approved appointments to the 17 member board including Toshio Nishizawa, allowing the board to formally name him as the company’s next president.

His predecessor, Masataka Shimizu, quit to take responsibility for the radiation crisis, which damaged the livelihoods of business people, farmers and fishermen in the Fukushima region.

Tepco faces a compensation bill to those victims that could exceed $100-billion.

When asked about corporate responsibility, Katsumata deferred the question to Shimizu, eliciting a laugh from the audience.

Japan’s government approved a taxpayer bailout for the utility this month. The proposal faces weeks of wrangling in Parliament, however, as opposition politicians and some ruling-party lawmakers seek to either amend or scuttle it.

Tepco, which has had its debt rating lowered to junk status, will struggle to make payments if the bailout plan is not implemented.

The appointment of Nishizawa, an insider who has worked at Tepco since graduating from college in 1975, may disappoint shareholders seeking to clean house at the utility.

Nishizawa’s approval, which many of the rank-and-file shareholders in the hall voted against, was greeted with groans and shouting from the packed crowd.

“A fundamental structural overhaul is needed at the board level to enable Tepco to rebuild its reputation and recover financially,” said Glass Lewis, a US proxy voting company that advises institutional investors which own more than $17-trillion in assets. Glass Lewis released the statement on its website ahead of Tuesday’s meeting.

Shares of Tepco fell 0.3% in Tokyo to ¥314, compared with a 0.7% gain in the benchmark Nikkei 225 index. – Reuters