Over many years, the company has built up a significant surplus of capital in the form of cash/equivalents, marketable securities, cross-shareholdings, and land assets, which has weighed down capital efficiency, with the 5-year average return on equity (“ROE”) at 5.9%. Further, capital returns have also been dragged lower due to the asset heavy leasing business, which Amada manages using its own balance sheet. Amada’s 5-year average ROE is lower than industrial machinery peers like DMG Mori at 19.0%, factory automation company Fanuc at 11.3% and industrial laser products maker Han’s Laser Technology at 17.3%. While we have engaged the company on multiple occasions to address these issues, the company has not made significant progress and most recently decided for the second time in two years to postpone its mid-term strategy to address fundamental inefficiencies of its capital structure citing uncertainties in the global macroeconomic environment. Since our concerns are not being addressed, we intend to vote against President Tsutomu Isobe as we believe top management should be held accountable for continuing to maintain an opaque capital management policy that is detrimental to corporate value creation. Read more about our vote rationale at NB Votes.