TOKYO -- A provision to let Takeda Pharmaceutical claw back executive pay after a major loss or false accounting drew majority support from shareholders even while failing to pass, in a sign of the scrutiny Japan's top drugmaker faces over its roughly $60 billion purchase of Irish peer Shire.
The vote on the shareholder-initiated proposal was disclosed Tuesday in Takeda's report on last week's general meeting.
While 52.2% of the shareholder vote favored the measure, this fell short of the two-thirds majority needed to approve changes to the company's articles of incorporation.
Recommendations from proxy advisory firms appear to have played a role in the outcome. Institutional Shareholder Services and Glass Lewis backed the proposal, and their advice likely carried weight among the foreign investors who own 50.7% of Takeda.
The provision specifically cited an impairment loss "on excessive investment in the past" as a potential clawback trigger -- a clear signal that the goal was to ensure that management is held responsible should the Shire deal result in major write-downs. Takeda announced in January that it had completed the acquisition.
The clawback would also have been triggered if indicators used to calculate performance-based pay were wrong or reflected "erroneous information." CEO Christophe Weber was Japan's fourth-highest-paid executive last fiscal year, with long-term incentives accounting for about half his total compensation of more than $16 million.
Another proposal calling for Takeda to disclose the compensation of individual directors had 49.65% of the shareholder vote in favor. Support for the measure slightly outweighed opposition, not counting abstentions. Proxy advisers recommended that shareholders vote for this resolution.
Weber was reappointed to the board with 84.3% support, down 7 percentage points from last year. The drop was likely influenced by ISS' recommendation to vote against him because of Takeda's low return on equity -- just 3% for the year ended in March.
Takeda will consider expanding disclosure of executive pay and adding a clawback provision in its internal rules rather than the articles of incorporation, based on dialogue with investors ahead of the meeting.