TOKYO -- Japanese beer and soft drink company Asahi Group Holdings has established performance-based standards to fire its CEO and president, a rare move for a Japanese company as it seeks to concentrate power for faster management while raising transparency.
Maintaining a return on equity of 13% in its three-year midterm management plan, starting this year, is one of those standards. ROE was 13.2% in 2018. The standards will make it easier for shareholders to hold executives accountable as Asahi, which produces Japan's top selling Asahi Super Dry beer, becomes a global company through a string of recent acquisitions.
It acquired the British owner of Italian beer Peroni and Dutch beer Grolsch in 2016. The following year it bought beer operations in five eastern European countries from Anheuser-Busch InBev, the world's largest brewer, for about 1.2 trillion yen ($10.7 billion at current rates).
The board decided to adopt quantitative standards -- including ROE, return on invested capital and sales -- for dismissing its top executives as Asahi moves toward a more centralized management structure. Representative director rights were transferred to President and CEO Akiyoshi Koji from Chairman Naoki Izumiya from March to hasten decision-making.
A nominating committee will have the power to review whether standards were met each accounting period. If not, the board will hold a meeting to examine the results and remove the person from their role as CEO and president.
Japan's Financial Services Agency and the Tokyo Stock Exchange's governance code, published in June, advises companies to set up an objective process to dismiss underperforming chiefs from their posts.
Asahi's overseas acquisitions mean that about half the company's nearly 30,000 employees are non-Japanese. Overseas investors comprised more than 29% of its shareholders at the end of 2018.
"Traditional corporate governance is out of touch as we take our first step as a global company this year," said Koji, who became president and chief operating officer in March 2016 before taking his current roles in March 2018, about implementing standards that could cost him his own job.