Toyota’s Chairman Akio Toyoda, along with nine other board members, was re-elected at the automaker’s annual general meeting on Tuesday. Despite recommendations against Toyoda’s re-election from leading proxy advisers due to governance issues and recent certification test scandals, his re-appointment was anticipated given the substantial shareholdings of other Toyota group firms, and his strong support from Japanese retail investors.
The re-election comes amid ongoing scrutiny of Toyota’s governance practices, particularly following a decline in Toyoda’s approval rating from 96% in 2022 to 85% last year. Analysts suggest that a significant drop in shareholder support could drive further governance reforms, including the potential unwinding of cross-shareholdings. Institutional Shareholder Services (ISS) and Glass Lewis have criticized Toyota’s handling of recent safety violations and certification testing issues, which have involved both Toyota and its group firm, Daihatsu. The New York City public employee pension funds, aligning with ISS, voted against Toyoda.
While opposition largely stems from overseas investors, who make up 25% of Toyota’s shareholders, Toyoda retains strong backing from retail investors in Japan, who hold 12.6% of shares. Many retail investors, buoyed by Toyota’s record profits and robust stock performance, continue to support Toyoda despite the certification issues. These irregularities, some involving stricter-than-required testing conditions, have persisted, but shareholders like 84-year-old Hidenori Takahashi express confidence in Toyoda’s commitment to rectifying these problems. The final figures on Toyoda’s support will be revealed on Wednesday.
Source: Reuters