PAL's Web site includes an outline of its recently revised voting guidelines, with a statement that the pension group will in principle oppose any takeover defense that it believes was not adopted with "maximum priority given to shareholder interests," or that does not “contribute to the firm's long-term profitability." PAL further warns that it will "express opposition through our votes on the election of directors to hostile takeover defense plans that boards have adopted without placing them to a shareholder vote."

PAL is the major plan sponsor for public employee pensions in Japan, responsible for 14 trillion yen in assets, or about $125 billion, ranking second only to the Government Pension Investment Fund (the umbrella group covering the local equivalent of U.S. Social Security) as Japan's largest public pension system.

Unlike the PFA, PAL so far has not developed a detailed voting policy or sought to recruit other investors to adopt its voting policies. Still, PAL made waves last year when it opposed some 16.5 percent of management proposals at June 2005 annual meetings. Much of the opposition focused on bonuses for retiring board members.

PAL's efforts last year are widely credited with encouraging a recent trend among Japanese issuers to abolish such retirement bonuses. Such bonuses, widely seen as inherently seniority-based, are giving way to annual compensation that may be more reflective of individual or corporation-wide performance in the preceding year.

With the combined influence of the PAL and the PFA, managements seeking to authorize poison pills without shareholder approval will likely be on the defensive when Japan's 2006 annual meeting season gets under way next month.