Recently, on June 24th, the Kadokawa Corporation had their annual general meeting to elect their board of directors, the individuals who represent the interests of a company’s shareholders. During this meeting, an activist shareholder campaign was staged against the current CEO of Kadokawa, Takeshi Natsuno, seeking to remove him from his seat on the board. While Natsuno has survived the attempt on his position, the vote against it demonstrates significant pressure from Oasis Management, an activist investor group that has been critical of Kadokawa’s management of FromSoftware after Elden Ring‘s global success. While Kadokawa has yet to officially report current shareholder support immediately after this most recent vote, we have last year’s annual general meeting numbers to go off of. Last year’s AGM reportedly had Natsuno at an approximate shareholder approval rating of 90%. Of course, this approval rating is set to reduce this year, even though Natsuno retained his position on the board. Oasis Management has apparent expectations that the approval rating will decline substantially, hinting at the success of their campaign or a deep dissatisfaction with Kadokawa’s current activities by shareholders.
Oasis Management, the activist investor group that attempted to oust Natsuno, has been involved with Kadokawa since 2020. The hedge fund is the company’s largest shareholder, currently owning around 15.25% of the company following some recent stock purchases. Before the annual general meeting was held, Oasis has been publicly campaigning against Natsuno and pushing for his removal. A good deal of their complains revolve around Elden Ring and how it was managed internationally. It cannot be denied that the action-RPG was a smash hit, winning the title of Game of the Year in 2022, and Kadokawa saw good profits on the Japanese market, with FromSoftware self-publishing the game there under Kadokawa’s ownership. However, outside of Japan, Elden Ring was publish by Bandai Namco, the market that made up 90% of Elden Ring’s sales — instead of going to Kadokawa, this supermajority of the profits went to Bandai Namco instead. Using the allotment of Elden Ring profits as a springboard, Oasis further argued that the general profitability of the company has worsened under Natsuno. Things like a decline in equity, decline in earnings per share, and a failure to meet Kadokawa’s annual operating profit forecast despite revisions were all mentioned by the campaign. Furthermore, both majority proxy advisory firms, groups that give advice to shareholders, sided with Oasis and recommended shareholders to vote against Natsuno.
After the vote, Kadokawa has responded to the issues raised by Oasis. Statements show that Kadokawa is opposed to Oasis throughout. The company claims that management reforms are currently underway, and replacing Natsuno in the middle of them would create uncertainty that could negatively affect them. Kadokawa has also stated that it would review its management structure, executive compensation, medium-term business strategy, and shareholder engagement in order to take the concerns expressed by the vote seriously. Hidetaka Miyazaki of FromSoftware has also publicly responded as he was asked about the shareholder conflict. His response is mostly an acknowledgement of awareness of the dispute. He emphasized that it was largely out of the control of FromSoftware, though he did say FromSoftware currently enjoys the freedom afforded to make the games it wants. Preserving that creative environment was stressed to be his top priority, and time was taken to reassure fans that more game announcement were coming and other unannounced games are also in development. Miyazaki did not endorse Oasis’s proposals whatsoever.