TOKYO – Toyota Motor Chairman Akio Toyoda could also be in no hazard of not being re-elected on the automaker’s annual basic assembly on Tuesday, however any additional massive drop in shareholder help may result in elevated motion on governance reforms.
This 12 months’s AGM will observe scandals involving violations of certification exams at Toyota and its group firms together with compact automobile maker Daihatsu and truck unit Hino Motors.
Proxy advisory corporations Institutional Shareholder Companies (ISS) and Glass Lewis have advisable that Toyoda not be re-elected, citing considerations over governance and the board’s independence. Since then, one other scandal over testing violations has additionally come to mild.
Toyoda’s approval score fell to 85% final 12 months from 96% in 2022 however he solely wants a majority to be re-elected and scandals apart, enterprise has been good.
The grandson of the automobile maker’s founder, Toyoda has been on the board since 2000, making him its longest-serving director. He’s anticipated to have help from particular person buyers in addition to the numerous suppliers and Toyota group firms amongst its shareholders.
“I do not assume Akio Toyoda-san shouldn’t be being re-appointed,” mentioned James Hong, head of mobility analysis at Macquarie. “It is simply that the approval fee coming down can be a little bit of a yellow flag to administration.”
Hong mentioned that potential motion from Toyota to counter criticism over governance may embody an acceleration of its efforts to unwind cross-shareholdings, notably shareholdings in non-automotive firms reminiscent of finance firms or telecoms agency KDDI.
The end result of the vote can be introduced on Tuesday although the approval fee is not going to be disclosed till Wednesday.
ISS has taken subject with the best way the automaker has handled certification irregularities inside the Toyota group, saying that Toyoda needs to be thought-about “finally accountable” for the errors.
“It will be significant that the corporate set up applicable compliance mechanisms underneath the board’s management,” it mentioned in a report. “Now is an efficient time for change within the face of incidents at its group firms.”
Glass Lewis, which is recommending that Toyoda not be re-elected for a second 12 months in a row, mentioned that he’s chargeable for the board’s lack of independence and in addition cited considerations about its strategic shareholdings and return on fairness.
Requested concerning the proxy advisers’ suggestions, Toyota mentioned in a press release to Reuters that taking inventory of its errors was lengthy rooted in its company tradition and Toyoda would take the lead in re-instilling that tradition and dealing with group firms to make sure efficient governance.
Toyota’s shares have misplaced 10% for the reason that newest scandal emerged early this month. That mentioned, the inventory continues to be up 17% for the 12 months to this point, outperforming the broader market and including to a achieve of 43% final 12 months.
The automaker retained its crown because the world’s top-selling automobile maker for a fourth consecutive 12 months in 2023, helped by a weak yen and rising hybrid automobile gross sales. It booked a document revenue for the final enterprise 12 months that led to March.
“Toyoda needs to be extremely considered he delivered outcomes and led Toyota to development,” mentioned Koji Endo, head of equities analysis at SBI Securities.
(Reporting by Daniel Leussink and Maki Shiraki; Modifying by Edwina Gibbs)
