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Lixil shareholders to vote on embattled leadership's fate

Japanese building materials maker will hold extraordinary shareholders meeting

Lixil shareholders have pushed back against its decision to replace its CEO last fall.   © Reuters

TOKYO -- Lixil Group will hold an extraordinary shareholders meeting by the end of May, where it will address major investors' demands to fire top executives over a controversial leadership reshuffle last fall, the company announced Monday.

An alliance of institutional investors, including U.K.-based Marathon Asset Management, and Lixil Director Keiichiro Ina say these executives undermined Lixil's governance when they stripped President Kinya Seto of his dual role as CEO in October 2018. They now want to oust Chairman and current CEO Yoichiro Ushioda, as well as Chief Operating Officer Hirokazu Yamanashi.

"I also support the removal of Mr. Ushioda," another Lixil director, Ryuichi Kawamoto, told Nikkei Monday. Kawamoto was the last CEO of Inax, one of the company's predecessors, that was founded by Ina's family.

"Director Ina and I want President Seto to return as CEO," he said. He and Ina both opposed Seto's removal at a board meeting on Oct. 31, but were overruled by Ushioda and his allies.

Investors holding a stake in Lixil as of April 15 will be allowed to vote on Ushioda and Yamanashi's fate. The official notice will go out on Friday. The date, location and agenda of the meeting will be announced as they are finalized.

The removal of the two executives will require majority support among the shareholders in attendance. Overseas investors held about 40% of Lixil shares as of September, while Ushioda owned about 3%.

Lixil has acknowledged that misleading remarks by Ushioda led to Seto's ouster. According to a recent investigation, Ushioda suggested when he convened the nominating committee that Seto wanted to quit, even though the latter had no such desire.

Kawamoto on Monday also questioned Ushioda's ability to lead the company. "Mr. Ushioda opposes the sale of Permasteelisa," he said, referring to the group's money-losing Italian unit. Lixil as a whole is expected to book a 97% plunge in net profit for the fiscal year through the end of March.

Lixil is one of Japan's leading building material suppliers, and operates major kitchen and bath brands like American Standard and Grohe. It was created in 2011 through a merger of five companies: Tostem, founded by Ushioda's family, as well as Inax, Shin Nikkei, Sunwave and Toex. Four out of Lixil's eight internal directors originally hail from Tostem.

The group is expected to propose a new makeup of its board at the regular shareholders meeting in June. "I hope that that the nominating committee will make the right choice based on the opinions of stakeholders," Kawamoto said.

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