(Securities Code: 4452 JT)
For more information and Oasis’s presentations on A Better Kao please visit: www.abetterkao.com
HONG KONG, March 04, 2025--(BUSINESS WIRE)--Oasis Management Company Ltd. ("Oasis") is the manager to private funds holding over 5.2% of the shares in Japanese global cosmetics and chemicals company Kao Corporation (4452 JT) ("Kao" or the "Company"). Oasis has adopted the Japan FSA’s "Principles for Responsible Institutional Investors" (a/k/a Japan’s Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies.
1. Is Oasis looking to replace any of Kao’s current directors?
No, Oasis is looking to add additional independent directors to the Board, not to remove or replace any incumbent directors. Oasis seeks to enhance Kao's Board by adding additional strategic expertise to support international growth and revitalize Kao’s underperforming Cosmetics and Health and Beauty Care divisions, which are the growth drivers of the business.
Oasis’s director nominees bring essential skills that are complementary to Kao’s current Board and are critical to ensuring Kao’s long-term sustainable growth to the benefit of all stakeholders. Their expertise will drive revenue growth and expand profitability that will lead to better opportunities and higher wages for employees, expanded channels for suppliers, more excellent products for customers, and a higher stock price for shareholders.
The Oasis nominees are Kao’s best chance of becoming a global leader that can compete with industry leaders such as P&G, Beiersdorf and Unilever.
2. Kao is already improving, why should we vote for the Oasis nominees?
The improvement in Kao’s recent financial performance has been limited to the Hygiene & Living Care ("HLC") segment (primarily domestic detergents) and the Chemical business. HLC has benefited from better pricing in Japan and lower raw material prices, however, domestic consumers remain price sensitive and the scope for further price increases is likely limited. Chemical also benefited from better pricing resulting in improved margins, but current levels of profitability look similar to what one would expect with top of the cycle profitability and going forward there is little upside.
Meanwhile the real potential growth drivers of the business, as also identified by Kao, Cosmetics and Health and Beauty Care continue to struggle. The Cosmetics division continues to generate losses, and the Health and Beauty Care segment underperforms industry competitors with much lower margins. Kao’s brand portfolio is promising, but poorly executed. Kao has failed in these segments to date and clearly does not have the right skills on the current Board to oversee a turnaround in these vital businesses.
Therefore, Oasis has nominated five director candidates who can strategically revitalize Kao's Cosmetics and Health and Beauty Care segments, offering expertise for international growth and diversification. Despite the potentially huge positive impact, Kao has been resistant to Oasis's candidate nominations without any valid rationale.
3. Oasis has nominated five directors, why did Oasis not nominate only one or two directors?
Kao's Board has failed to address critical performance issues in international Cosmetics and Health and Beauty Care markets. Oasis proposes five independent directors with specialized expertise in:
All of these skills are vital to rejuvenating and accelerating Kao’s growth drivers in Cosmetics and Health and Beauty Care. For example, successful brand selection and marketing will dramatically increase demand for goods internationally which will require a stronger supply chain, superior DX and e-commerce capabilities and a pricing strategy to ensure competitiveness and profitability.
Together these nominees will provide oversight and guidance to improve Kao's operational performance and stakeholder value. All these nominees are key to driving Kao’s success in international growth. The proposed addition would expand Kao's Board to 14 directors, aligning with industry standards for board size for a company like Kao.
4. Is Yannis Skoufalos truly independent?
Yes, Yannis Skoufalos is truly independent.
Oasis conducted a rigorous global search, evaluating 223 candidates before selecting five top-tier director nominees, including Yannis Skoufalos. While Mr. Skoufalos is currently compensated by Oasis for his shareholder communications, this arrangement will end after the Annual General Meeting, after which he will serve independently.
Kao's criticism of Mr. Skoufalos' independence fails to stand up to scrutiny given its own Board members' significant external ties, including:
These existing relationships seem far less independent than Oasis's temporary compensation for Mr. Skoufalos.
5. Is there a skills overlap between Kao’s nominees Lisa MacCallum and Sarah Casanova and the Oasis nominees Martha Velando and Hugh Dineen?
No, there is no overlap in skills between Kao’s nominees and the Oasis nominees.
Kao's claim of skills overlap with Oasis nominees is fundamentally flawed and underscores their poor understanding of marketing. Kao’s nominees lack critical global beauty brand expertise:
In contrast, Oasis nominees Hugh Dineen and Martha Velando bring precisely what Kao needs -- direct experience growing and transforming beauty brands, expertise across multiple jurisdictions and price points, and a proven track record competing with Kao in haircare, body care, skin care, and cosmetics. For example, as Chief Marketing Officer for Aesop, Ms. Velando oversaw a team of more than 100 marketing professionals globally, expanding the brand’s international presence and drove significant revenue increases, something Molton Brown has failed to do. At previous employers she oversaw a billion-dollar global marketing budget and has extensive experience working at luxury, prestige and mass price points from her time at L'Oréal and Coty.
Mr. Dineen has transformed multiple brands including hair care, which Kao has identified as needing business transformation. At Johnson & Johnson he helped turn around six brands in the consumer goods division, and at MetLife he developed new brand strategies for B2B, B2C, and subsidiary spin offs.
None of Kao’s nominees has the same depth of experience in these vital areas as Ms. Velando and Mr. Dineen. Both of these Oasis candidates will add complementary skills and oversight to Kao’s Board that will truly transform Kao into a global leader in its Cosmetics and Health and Beauty Care segments.
6. Is there a skills overlap between Kao’s board members Makoto Takashima and Takaaki Nishii and the Oasis nominee Lanchi Venator?
No, there are no skills overlap between Kao’s Board members and Lanchi Venator.
Mr. Nishii has held very senior leadership roles at Ajinomoto but has not had a specific finance role. Mr. Takashima has worked for a financial institution but has no financial experience or expertise in the FMCG or beauty industry, or in developing pricing models for these products in competitive markets. Neither of these two directors have industry specific financial expertise that can provide actionable industry insights.
Ms. Venator, on the other hand, brings direct and specific beauty industry financial experience that helped scale Estée Lauder’s revenues from US$10 billion to US$18 billion during her time at the company. Ms. Venator implemented sophisticated pricing strategies across mass, prestige, and luxury market tiers, directly driving revenue growth and profitability at Estée Lauder. She established robust metrics for marketing investment returns and leveraged consumer data to inform critical financial decisions. Her strategic approach demonstrates a sophisticated understanding of market segmentation and data-driven decision-making in the beauty industry -- critical expertise in driving sustainable long-term profitability at Kao particularly in overseas markets.
Ms. Venator will provide unique and deep oversight of Kao’s financials and pricing strategies as well as provide advice that will help drive revenue growth overseas.
7. Kao’s Board of Directors believes that its supply chain is already at a sufficient level and there is no need for enhancement, so why is it necessary to appoint Yannis Skoufalos?
Kao's path to resolving several years of real revenue stagnation lies in international expansion and diversification. To achieve this, it is critical that Kao optimizes its global supply chain infrastructure to support the scaling up of its international operations.
Kao’s claims that its supply chain is at a sufficient level is simply not true. For example, the Company's very limited self-owned North American production and logistics footprint severely limits its ability to scale efficiently in the US market, and this bottleneck constrains growth and profitability. It is unrealistic for Kao to grow internationally with its existing supply chain.
Supply chain expertise is fundamental to the scaling of any global business, a fact recognized by industry peers who routinely include supply chain specialists on their boards. For context, Haleon's Chairman serves as a supply chain advisor to the British Government, underscoring the strategic importance of this operational expertise.
Kao’s dismissal of the importance of supply chain expertise reflects that the Company is ill prepared to execute effectively on scaling its business internationally.
Yannis Skoufalos is a world-class leader in this domain with nearly 35 years of global supply chain expertise at P&G, where he held senior executive roles overseeing international supply chain operations and managed over 57,000 people. He brings deep, objective experience that can provide critical independent oversight to Kao's strategic challenges and his extensive external background demonstrates a proven track record of implementing transformative operational strategies.
There is no one at Kao with a similar pedigree to Mr. Skoufalos, and Kao would be fortunate to have his insights to ensure the long-term growth and profitability of the Company.
8. Why is it important to have a director with Digital Transformation ("DX") expertise on the Kao board?
Kao claims it has sufficient DX board expertise with President Hasebe and Ms. MacCallum. However, neither have anywhere near the expertise that Oasis nominee Anja Lagodny brings from her experience at global giants such as Nestle, Microsoft, Mondelez, Carlsberg, and Japan Tabacco International.
Kao needs to revamp its DX strategy as it significantly underperforms competitors domestically and internationally. For example, Kao’s online mall, My Kao Mall Japan, attracts only 1.6 million monthly visitors compared to @Cosme's 23.6 million monthly visitors. Curél appears in top 10 internet search results just 31 times versus Cetaphil's 155 times in leading Southeast Asian markets, reflecting poor search engine optimization and leading to significant lost revenue opportunities. Bizarrely, we also note that many of Kao’s own brand websites remain outside Kao’s control.
It is clear that Kao lacks board oversight of its digital strategy, which is critical to its future growth and development. Ms. Lagodny can remedy this as she offers critical expertise from her role as Chief Digital Officer at Japan Tobacco International, with a proven track record of creating global digital strategies, establishing data-driven digital businesses, and driving efficiency across R&D, supply chain, and e-commerce platforms.
Kao has repeatedly emphasized the importance of DX to its future, yet it lacks the experience and expertise on the current Board to oversee the strategy. Appointing Ms. Lagodny will enhance Kao’s future growth and competitiveness in domestic and international markets.
9. One of the roles a board of directors undertakes is to provide oversight, can the Oasis candidates provide this oversight?
Oasis's proposed director candidates offer critical strategic oversight through their diverse global experience and proven track records of driving business improvements.
With expertise spanning supply chain optimization, marketing strategy, financial planning, brand management, and digital transformation, these nominees bring independent perspectives and skills currently absent from Kao's board.
Our nominee directors’ collective background positions them to provide rigorous, expert-level guidance that can transform the Company's strategic direction and performance particularly in the underperforming Cosmetics and Health and Beauty Care segments and overseas markets. These are areas in which Kao has lacked sufficient oversight to date despite their vital importance to the future growth of the Company.
10. Do any of the Oasis nominees have experience in Japan? Is it necessary to have Japan experience to join the Kao Board?
Yes, all of Oasis’ nominees have Japan experience.
Martha Velando served as Aesop's CMO with oversight over Aesop’s significant Japanese operations, Hugh Dineen led large Japan teams at MetLife and Anja Lagodny directed digital strategy for Japan Tobacco International which provided the basis for Japan Tobacco’s domestic digital strategy. Japan also fell under Lanchi Venator’s domain as part of her remit to implement a global pricing strategy for Estée Lauder. Yannis Skoufalos sat on the board of Blue Yonder following its acquisition by Panasonic in 2021 as well as overseeing P&G’s manufacturing plants and managing its supplier network in Japan.
However, Oasis’s proposed candidates offer more than local experience, and we are not proposing the five candidates for their domestic expertise. Kao's current Board is already saturated with domestic experience but what it lacks are directors with global FMCG, consumer goods, and beauty expertise who can effectively scale Kao’s brands internationally.
The Oasis nominees together bring precisely these missing capabilities and offer the strategic insight and oversight necessary to transform Kao's overseas Consumer Products business and ensure a solid foundation for a long-lasting recovery in Kao’s business.
11. Will adding so many directors make the Board too big?
No, adding these directors will not make the Board too large.
If anything, Kao's current Board is undersized compared to industry peers.
A direct consequence of the lack of relevant skills on the Board combined with its small size has been Kao’s ongoing failure to craft a viable overseas growth strategy, which is largely responsible for the Company’s underperformance.
Oasis’s proposed directors bring critical skills to improve oversight and drive overseas growth, particularly in Cosmetics, Health Beauty Care, and global markets.
Even after our additions, Kao's Board would remain comparable in size to successful FMCG companies like P&G, L'Oréal, and Estée Lauder; and only marginally larger than Rohto, Kose, and Haleon.
12. Kao states that it went through an effective and transparent process in interviewing and nominating directors. Do you agree?
Kao’s actions demonstrate that their rejection of Oasis’s nominees was a foregone conclusion and reflects their disinterest in constructive engagement.
We note the following:
Kao’s rejection of Oasis nominees is self-defeating and counterproductive. The Oasis nominees are objectively world-class experts in their fields and possess the skills that Kao so desperately lacks. Oasis’s campaign has sought to be additive to enhance the Board and secure the long-term corporate growth of Kao to benefit all its stakeholders.
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In conclusion, we encourage shareholders to vote FOR Oasis’s five independent, world-class Director candidates at Kao’s upcoming AGM on March 21, 2025 – these five highly qualified independent outside directors with deep global expertise in key strategic areas such as marketing, supply chain, digital transformation, and portfolio restructuring can help to set Kao on the right path to success. We also encourage shareholders to vote FOR Oasis’s proposed revised compensation plan to align management’s incentives with company performance. Oasis’s proposals will bring Kao’s governance in line with its global competitors, offering shareholders a no-risk opportunity for meaningful improvement
We encourage all shareholders to attend Oasis’s Kao shareholder investor information day at The Okura Hotel on March 6 to meet Oasis’s Outside Director candidates and hear Oasis’s full plan for A Better Kao.
Shareholders should register at https://abetterkao.com/makekaobettertoday/. Capacity is limited. Only registrants with a valid Confirmation Code will be admitted.
For more information and Oasis’s presentations on a better Kao please visit: www.abetterkao.com. We welcome all stakeholders to contact us at info@abetterkao.com.
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Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at https://oasiscm.com. Oasis has adopted the Japan FSA’s "Principles of Responsible Institutional Investors" (a/k/a the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with our investee companies.
The information and opinion contained in this press release (referred to as the "Document") is provided by Oasis Management Company ("Oasis") for informational purposes only or for reference purposes only. The Document is not intended to solicit or seek shareholders to, jointly with Oasis, acquire or transfer, or exercise any voting rights or other shareholder’s rights with respect to any shares or other securities of a specific company which are subject to the disclosure requirements under the large shareholding disclosure rules under the Financial Instrument and Exchange Act ("FIEA"). Shareholders that have an agreement to jointly acquire or transfer, or exercise their voting rights or other shareholder’s rights with respect to any shares or other securities of a specific company are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate shareholding with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Except for the case where Oasis expressly enters into such agreement, Oasis does not intend to be treated as a Joint Holder and/or a Specially Related Person with other shareholders under the Japanese FIEA or to take any action triggering reporting obligations as a Joint Holder. Oasis does not have any intention to receive any power to represent other shareholders in relation to the exercise of their voting rights. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.
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