Fir Tree Comments on Shareholder Proposals Delivered to JR Kyushu to Help the Company Achieve its Full Potential

Encouraging Company Announcements on Board Composition, Corporate
Governance and Capital Allocation Decisions – But More Change is Needed

NEW YORK & TOKYO–(BUSINESS WIRE)–Fir Tree Partners (“Fir Tree”), manager of certain funds that reported
collective beneficial ownership of approximately 6.1% of the outstanding
shares of Kyushu Railway Company (“JR Kyushu” or the “Company”) (TSE
ticker 9142) in the amendment to their large shareholding report
disclosed on March 22, 2019, today issued the following statement
regarding Fir Tree’s recent shareholder proposals, for the Company’s
Annual Meeting of Shareholders (the “Annual Meeting”) to be held on June
21, 2019.

Fir Tree also today launched a website (
to provide stakeholders with additional information regarding its
engagement with JR Kyushu. An investor presentation on the Company is
available on this website.

On May 13th, JR Kyushu announced certain corporate governance
updates and also noted its opinion on Fir Tree’s proposals. Fir Tree is
encouraged by certain elements of the Company’s announcement, but
believes additional changes are required.

In particular, Fir Tree notes the following positive developments by the

1. Nominating two new independent director nominees for election at the
Annual Meeting – highlighting JR Kyushu’s openness to outside
perspectives on the Board;

2. Introducing a performance-based stock compensation plan – providing
the Executive Directors on the Board and the management team greater
alignment with shareholders.

However, more remains to be done. The share price reaction and financial
analyst community commentary after the May 13th announcement
clearly shows disappointment. This reaction follows on the heels of
historical share price underperformance relative to its peers.

Fir Tree’s proposals are the result of extensive work over a period of
nearly three years, in which it has worked with experts and consultants
in real estate, transportation and corporate governance to ensure its
proposals would be reasonable and balance the needs of all stakeholders,
including providing significant financial flexibility for JR Kyushu’s
robust capital plan for the continued safety of its railway passengers.

Fir Tree’s proposals seek to address several key issues:

1. Inefficient capital structure resulting in a higher cost of
capital and lower return on equity

  • Fir Tree’s proposal: Issue debt to repurchase 10% of outstanding

2. Corporate governance

  • Fir Tree’s proposal: Implement a Three-Committee Board structure.

3. Questionable goal alignment between the Board and the
Company’s performance

  • Fir Tree’s proposal: Implement a stock compensation plan for
    directors on the Board.

4. Lack of industry expertise on Board

  • Fir Tree’s proposal: Elect three outside independent industry
    experts to the Board.

For more details on these proposals please consult Fir Tree’s website:

Aaron Stern, Managing Director and Partner at Fir Tree, said:

“We appreciate that JR Kyushu’s recent announcements acknowledge and
reflect, to a degree, Fir Tree’s input and recommendations in our
shareholder proposals submitted to the Company. Specifically, we are
pleased to see JR Kyushu take some initial steps towards adding
independent directors to the Board and introducing a stock compensation
program at the Board and management level. However, based on several
years of engagement with the Company, we firmly believe that more change
is needed in order to fully address the issues that we have highlighted.”

“We are disappointed that JR Kyushu chose to oppose our three highly
qualified, independent nominees, especially after Fir Tree had ongoing
proactive conversations with the Company, followed by what we understand
were very positive discussions by the Company with our nominees. These
nominees have significant professional and strong personal ties to Japan
and possess superior experience in the specific areas that we believe
are critical to the Company’s success, including real estate, corporate
finance, M&A and corporate communications. If elected, these three
individuals would work towards growing JR Kyushu’s long-term potential
and help the Company continue on its growth path.”

“We continue to believe all JR Kyushu shareholders deserve a Board which
firmly adopts the best practices of the Corporate Governance Code and
balances shareholder returns with future investments.”

“We look forward to further discussing our ideas and nominees with our
fellow shareholders.”

About Fir Tree Partners

Fir Tree Partners, founded in 1994 and located in New York City (HQ) and
Miami, is a value-oriented investment manager that invests on behalf of
endowments, charitable and philanthropic foundations, pension funds and
other institutional and private investors. The firm has successfully
applied its opportunistic approach across a wide array of asset classes,
industries and geographies, including in Japan where it has been
actively investing for nearly a decade. Fir Tree Partners has adopted
Japan’s Stewardship Code.

Important Notice

This press release should not be construed as asking for an agreement
on Fir Tree’s proposals or soliciting any person to authorize Fir Tree
or any third party to exercise voting rights on such person’s behalf
with respect to the election of directors of JR Kyushu or any other
matter to be presented to shareholders at JR Kyushu’s upcoming Annual
General Meeting (the “AGM”).
Fir Tree intends to
encourage fellow shareholders to cast their votes against certain
proposals by JR Kyushu and in favor of Fir Tree’s proposals by either
attending the AGM or using the voting card enclosed with the convocation
notice that will be sent by JR Kyushu. This press release is not
intended and should not be considered to solicit, encourage, induce or
seek for fellow shareholders to authorize Fir Tree or any other third
party as their proxy in exercising their voting rights on their behalf.

This press release is based solely on Fir Tree’s own analysis and
information made publicly

available by JR Kyushu.


Investor Contact:
Scott Winter / Gabrielle Wolf
M&A Incorporated
+1 (212) 750-7271

Media Contacts:
In Japan
Dan Underwood
+81 3 5425-7220

In the U.S.
Sloane & Company
Dan Zacchei / Joe
+1 (212) 486-9500

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