Toshiba shareholders have ousted the chair of the company’s board in a historic vote that tipped one of the country’s most celebrated corporate names into uncharted territory and marked a watershed for investor activism in Japan.

Friday’s decision by shareholders to vote against the reappointment of Osamu Nagayama as chair at the annual meeting was described by some of Toshiba’s largest investors as an inevitable consequence of the company’s long failure to establish better governance.

The vote against the board chair was not only exceptionally rare in a corporate world where management is used to unquestioning support, but it was especially eye-catching as it brought down a widely-respected business leader.

The AGM followed the release this month of an explosive independent report into the events surrounding Toshiba’s 2020 annual meeting. The report alleged collusion between the company and Japan’s government to suppress activist shareholders.

In addition to revealing contacts between Toshiba and Japan’s Ministry of Economy, Trade and Industry over how to deal with shareholders, the report’s findings contrasted with the company’s own efforts to investigate allegations surrounding the AGM.

The report, which was successfully demanded by activist shareholders, concluded that the 2020 AGM had not been fairly conducted, while Toshiba’s own investigation, under the supervision of its audit committee, found no evidence of company pressure on shareholders.

Since its publication, the independent document has been cited by investors and proxy advisers as a reason to vote against the reappointment of Nagayama, who has been board chair for the past year and heads the nomination committee.

Nagayama was appointed to the roles after the 2020 AGM and was not criticised in the independent report, but investors argued he should be held responsible for the way Toshiba’s own investigation was carried out.

Shareholders also rejected the reappointment to the board of Nobuyuki Kobayashi, another member of the audit committee, at the two-and-a-half-hour meeting.

Before his stint at Toshiba, Nagayama was known for helping Sony’s turnround and turning Chugai Pharmaceutical into a global player through its capital tie-up with Switzerland’s Roche.

On Friday, Nagayama told shareholders that the board “takes seriously” the report’s findings and pledged to get to the bottom of what happened during last year’s AGM. “We will aim to secure further transparency in management,” he said.

Satoshi Tsunakawa, who has served as interim chief executive since the abrupt resignation of Nobuaki Kurumatani in April, promised to “actively continue dialogue” with activist shareholders.

Kurumatani stepped down following a botched $20bn takeover attempt of Toshiba by his former employer CVC, which continues to fuel speculation of other private equity bids.

Still, investors appeared frustrated by management’s repeated promises to improve Toshiba’s corporate culture as it lurched from one crisis to the next. Its troubles began in 2015 with the discovery of accounting fraud, while the company came close to collapse two years later with the failure of its US nuclear business.

“From reading this report, I felt it had similarities to Toshiba’s accounting problem in 2015,” a shareholder and former employee said. Another investor said: “I’ve never seen anything like this. How is Toshiba going to respond to this situation?”.



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