Toshiba Chairman of the Board votes against corporate governance in Japan

Journalists sit in front of a Toshiba logo ahead of the company’s press conference in Tokyo on November 8, 2018.

Martin Bureau | AFP | Getty Images

Crisis Toshiba shareholders on Friday dismissed its chairman of the board and another director, a strong rebuke from the company after it was discovered that it had colluded with the government to remove the interests of foreign investors.

For many, the annual general meeting result marks another turning point for corporate governance in Japan after activist Toshiba shareholders won earlier this year by securing an investigation into allegations of pressure on investors foreigners.

“This result signals a paradigm shift in Japan and will only embolden activist investors, both foreign and domestic,” said Justin Tang, head of Asian research at United First Partners in Singapore.

But supporters of former board chairman Osamu Nagayama say his failure to be re-elected will only set Toshiba back, robbing the industrial conglomerate, which has gone from crisis to crisis since 2015, of experienced leadership.

The breakdown of the votes was not immediately disclosed. The newly elected board will meet later Friday to discuss who will lead the new board.

According to a Toshiba source, foreign investors voted in greater numbers than at previous company shareholders’ meetings because they saw it as an important test of corporate governance in Japan.

The source was not allowed to speak to the media and declined to be identified.

Nagayama did not join Toshiba’s board until mid-2020 after alleged pressure from foreign shareholders to vote in line with board candidates.

A former CEO of Chugai Pharmaceutical and a director of the Sony Group board of directors, he is well respected and the electronics giant and former US Ambassador to Japan John Roos have expressed their support for him.

But his critics have argued that he should resign to take responsibility for the board’s resistance to responding to the allegations.

Shareholder advisory firms Institutional Shareholder Services Inc and Glass Lewis had recommended shareholders not to renew it, while 3D Investment Partners, Toshiba’s No.2 shareholder based in Singapore with a 7.2% stake, had called for his resignation.

3D Investment said in a statement after the outcome that it hopes the AGM marks the start of a new era at Toshiba and looks forward to a constructive and ongoing dialogue with the board and the team. of Toshiba’s leadership.

Toshiba appointed 11 directors to the AGM, including Nagayama. Nobuyuki Kobayashi, member of the audit committee, was also excluded.

Toshiba shares recovered from earlier losses to be stable after the result. The stock has risen by more than two-thirds in value this year, bolstered by a $ 20 billion bid on the company by private equity firm CVC Capital. Although Toshiba rejected this offer, it promised a strategic review.

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