Seven & i Holdings Co. will meet this week to discuss leadership succession, days after billionaire activist investor Dan Loeb warned Japanâ€™s largest retailer against creating a family dynasty, according to people with knowledge of the matter.
The companyâ€™s nomination and compensation committee is scheduled to meet Wednesday, said two of the people, who asked not to be identified because the deliberations are private. It may discuss a personnel shuffle that could affect managers including Ryuichi Isaka, president of Seven-Eleven Japan Co., and Kazuki Furuya, the deputy head of the convenience-store chain, people familiar with the matter said.
Loeb, the founder of Third Point LLC whoâ€™s built a reputation for confronting boards over changes in management, said in a letter to the retailer this week that heâ€™s concerned Furuya may become interim president at Seven-Eleven Japan as part of Seven & i Chief Executive Officer Toshifumi Suzukiâ€™s plans to make his son, Yasuhiro, the next president of the parent company. Isaka should be a leading candidate for the position, Loeb said.
A representative for Seven & i declined to comment on the meeting.
Loeb, whoâ€™s contributed to CEO shakeups at Yahoo! Inc. and Dow Chemical Co., faces an uphill battle with Seven & i.
Only four of the retailerâ€™s 15 directors are outsiders, and the boardâ€™s independent members received the worst score among Topix 500 index companies in a Jefferies Group LLC report this month that evaluated their skills based on backgrounds in business, consulting and other relevant fields.
â€œItâ€™s very hard to believe that, in this structure, thereâ€™s anybody to push back, which is what the board is supposed to be there for,â€ Zuhair Khan, the Tokyo-based equity analyst who authored the Jefferies report, said of Seven & i in an interview. â€œThe main board structure leaves a lot to be desired.â€
Seven & iâ€™s advisory committee is charged to discuss the appointment of executive officers, directors and their compensation, according to a March 8 company statement.
Loeb cited â€œoutsized resultsâ€ at Seven-Eleven Japan as a reason why Seven & iâ€™s board should consider Isaka to be a leading candidate to be the parent companyâ€™s next CEO. The convenience-store unit has increased sales for 43 consecutive months, even as a sales tax increase during the streak weighed on consumption and helped tip Japan into recession.
The activist investor also wrote that Toshifumi Suzuki, 83, has â€œchronic health problems.â€ Seven & i has denied this, saying the CEO goes into the office daily for work.
Seven & i is set to rise for a third day, gaining 0.2 percent to 5,018 yen at 10:48 local time in Tokyo trading. The companyâ€™s shares have declined 6.6 percent since Oct. 26, the last day of trading before Japanese newspapers first reported Third Pointâ€™s investment.
Third Point is advocating for Seven & i to restructure its Ito-Yokado Co. general-merchandise unit and divest retailers Sogo & Seibu, Barneyâ€™s Japan, and Nissen Holdings Co. Suzukiâ€™s successor should focus on running the company as a convenience-store operator, Loeb wrote.