Kadokawa (9468.T), a prominent Japanese firm in manga, anime, and video games, notably behind the dark epic “Elden Ring” franchise, is currently navigating a significant challenge. Its chief executive, Takeshi Natsuno, 61, is facing a substantial activist shareholder push for his removal, spearheaded by Hong Kong-based Oasis Management. This high-stakes showdown is set to unfold at Wednesday’s annual general meeting, drawing considerable attention from investors across Japan as authorities increasingly press companies for enhanced returns and improved corporate governance.
Oasis Management, one of Japan’s most active activist investors and now Kadokawa’s largest shareholder with a 13.76% stake, has been engaging with the firm since 2020. Central to Oasis’s criticism is the publishing arrangement for “Elden Ring,” a massive global success, which sees Kadokawa unit FromSoftware publish in Japan while Bandai Namco (7832.T) handles overseas distribution. Oasis contends this arrangement has led to “material profit leakage” and blames Natsuno for failing to capitalise fully on the game’s success. This view is echoed by major proxy advisors Institutional Shareholder Services and Glass Lewis, both recommending shareholders vote against the company’s re-election proposal for Natsuno.
While Natsuno garnered 90% shareholder support at last year’s AGM and has the backing of Kadokawa’s board, who cite potential uncertainty from his removal amidst ongoing reforms, his position is precarious. The firm’s financial performance has faltered, with return on equity plummeting to 0.5% last year from 9.4% in March 2022, and annual operating profit undershooting its own revised forecast in May. These performance issues, combined with recent challenges including a data leak, an admonishment from the Fair Trade Commission, and the corruption conviction of a former chairman, complicate Natsuno’s defence. A significant drop in support, even if he retains his role, could intensify pressure for changes sought by Oasis, such as increased investment in major titles.
