Tepco faces shareholder wrath over nuclear crisis

Reuters News
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Posted: Jun 28, 2011 1:03 AM
Tepco faces shareholder wrath over nuclear crisis

By Kevin Krolicki and Taiga Uranaka

TOKYO (Reuters) - The utility at the heart of Japan's nuclear crisis, Tokyo Electric Power Co, faced pressure Tuesday from heckling shareholders to shut all its reactors in a sign of growing Japanese opposition to nuclear energy.

Activist shareholders may struggle, however, to convince long-term institutional investors such as the biggest shareholder, Dai-ichi Life Insurance, to change their minds and vote for a resolution to abandon atomic energy.

Many shareholders at a rowdy annual general meeting in Tokyo heaped scorn on the utility's executives over their handling of the disaster at the Fukushima nuclear plant in March and the company's subsequent slide to near bankruptcy.

"They're going to have to give up nuclear power in the next few years. Construction of new plants is going to be impossible," said a 37-year-old man from Nagano, who asked not to be identified.

Security was tight as shareholders and protesters converged on the Prince Park Tower Hotel in central Tokyo.

The meeting started with thousands of stockholders packed into the venue and several hundred unable to find seats. The vote on the anti-nuclear proposal is expected later Tuesday.

The binding resolution, which requires a two-thirds majority vote to be approved, asks that the utility scrap its nuclear reactors. It does not give a timeframe.

Although put forward annually by anti-nuclear activist shareholders, the proposal this year takes on greater resonance with radiation still escaping from damaged reactors at the utility's plant in Fukushima, 240 km (150 miles) north of Tokyo.

Three reactors went into meltdown after a massive earthquake and tsunami hit the plant on March 11, forcing 80,000 residents to evacuate as engineers battled radiation leaks, hydrogen explosions and overheating fuel rods. The earthquake and tsunami left nearly 24,000 people dead or missing.

The utility's chairman, Tsunehisa Katsumata, opened the meeting with an apology.

"We're working to get out of this crisis as quickly as possible," he said to scattered applause and one angry stockholder who shouted at the board members.

Katsumata paused before answering hundreds of written questions from shareholders as one woman, who appeared on the verge of tears, shouted out that he should have quit on March 11.

One attendee suggested the board "jump into the reactors and die," before being forced by security guards to sit down. Another said the board would have been forced to perform ritual disembowelment had they lived in an earlier era.

Since the disaster, Tokyo Electric's shares have plummeted 85 percent, wiping $36 billion off the company's market value.

Not every shareholder supported the motion to abandon nuclear power.

"It's a difficult choice, but I don't think Japan can make it without nuclear power," one 50-year-old from Yokohama who bought one share in late March so he could join the meeting, told Reuters at the hotel.

"The power shortages we had in March showed that. We have to be more like France than Germany."

NEW BOSS

Among groups intent on voicing their anger at the utility, known as Tepco, was Greenpeace, which asked demonstrators to meet in front of the hotel as shareholders arrived. In addition to the motion to drop nuclear energy, shareholders will be asked to approve board appointments including Toshio Nishizawa, who is due to be formally chosen by the new board as the company's next president.

His predecessor, Masataka Shimizu, quit to take responsibility for the radiation crisis, which damaged the livelihoods of business people, farmers and fishermen in the Fukushima region.

Tepco faces a compensation bill to those victims that could exceed $100 billion.

When asked about corporate responsibility, Katsumata deferred the question to Shimizu, eliciting a laugh from the audience.

Japan's government approved a taxpayer bailout for the utility this month. The proposal faces weeks of wrangling in parliament, however, as opposition politicians and some ruling-party lawmakers seek to either amend or scuttle it.

Tokyo Electric, which has had its debt rating lowered to junk status, will struggle to make payments if the bailout plan is not implemented.

The appointment of Nishizawa, an insider who has worked at Tepco since graduating from college in 1975, may disappoint shareholders seeking to clean house at the utility.

"A fundamental structural overhaul is needed at the board level to enable Tepco to rebuild its reputation and recover financially," said Glass Lewis, a U.S. proxy voting company that advises institutional investors which own more than $17 trillion in assets. Glass Lewis released the statement on its website ahead of Tuesday's meeting.

Shares of Tepco fell 0.3 percent in Tokyo to 314 yen, compared with a 0.7 percent gain in the benchmark Nikkei 225 index.

(Writing by Tim Kelly; Editing by Joseph Radford, Matt Driskill and Dean Yates)