Tsuruha: A Company In Need of Governance Reform
Tsuruha: A Company In Need of Governance Reform
Tsuruha has encountered significant challenges related to corporate governance failures. These failures, including issues of board independence, oversight effectiveness, and the undue influence of the three founding families, have hindered the Company’s ability to unlock its full potential, leading to suboptimal performance and concerns among shareholders.
Tsuruha’s Corporate Governance Failures:
Board Independence: The current board composition raises concerns about independence. The three founding families, despite collectively owning less than 10% of Tsuruha’s shares, hold a disproportionate, four out of five seats of non-audit member of director seats. This raises questions about impartial decision-making. Oasis is the second-largest shareholder, holding approximately 13% of Tsuruha's shares -- far more than any of the founding family members.
Undue Influence: The three founding families continuing to exert their control over the Company’s subsidiaries, hindering synergy realization and resulting in poor governance. This concentration of power restricts effective oversight and limits opportunities for sustainable growth.
Lack of Accountability: Instances such as the return of Mr. Hisaya Ogawa as CEO of subsidiary Kusurino Fukutaro, despite a serious incident involving a failure in medical recordkeeping, raise concerns about responsibility and responsible management.
Mr. Ogawa and his relatives own and rent the HQ of the subsidiary and other stores to the Company.
Questionable Director Appointments: Non-independent directors, some with long-standing relationships traced back nearly a decade with the Tsuruha family, have been appointed as outside directors. This compromises the objective oversight necessary for effective governance.
The company has proactively worsened its governance, replacing outside directors and auditors with retail experience with individuals whose primary qualification appears to be their loyalty to the Company
The Need for Change:
Tsuruha’s governance practices demonstrate a concerning trend of prioritizing the interests of the founding families over the broader shareholder base. This approach has resulted in missed opportunities, underperformance compared to industry peers, and an urgent need for governance reform.
To pave the way for Tsuruha to become a leading player in the drugstore industry, we believe the Company needs an entirely new slate of high-quality, independent, and diverse outside directors who can provide unbiased oversight and strategic guidance. Oasis’s proposed director candidates are deeply qualified and capable of providing this oversight and guidance needed to steer the company towards a brighter future after this period of significant underperformance.
Shareholders must act now to improve corporate governance at Tsuruha
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