TOKYO – Toyota Motor Chairman Akio Toyoda could also be in no hazard of not being re-elected on the automaker’s annual common assembly on Tuesday, however any additional huge drop in shareholder assist may result in elevated motion on governance reforms.
This 12 months’s AGM will observe scandals involving violations of certification checks at Toyota and its group corporations together with compact automobile maker Daihatsu and truck unit Hino Motors.
Proxy advisory companies Institutional Shareholder Companies (ISS) and Glass Lewis have really helpful 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 gentle.
Toyoda’s approval ranking 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 assist from particular person buyers in addition to the various suppliers and Toyota group corporations amongst its shareholders.
“I do not assume Akio Toyoda-san just isn’t being re-appointed,” mentioned James Hong, head of mobility analysis at Macquarie. “It is simply that the approval charge coming down will probably be a little bit of a yellow flag to administration.”
Hong mentioned that potential motion from Toyota to counter criticism over governance may embrace an acceleration of its efforts to unwind cross-shareholdings, notably shareholdings in non-automotive corporations comparable to finance corporations or telecoms agency KDDI.
The end result of the vote will probably be introduced on Tuesday although the approval charge is not going to be disclosed till Wednesday.
ISS has taken problem with the best way the automaker has handled certification irregularities throughout the Toyota group, saying that Toyoda needs to be thought-about “finally accountable” for the errors.
“It is vital that the corporate set up applicable compliance mechanisms below the board’s management,” it mentioned in a report. “Now is an efficient time for change within the face of incidents at its group corporations.”
Glass Lewis, which is recommending that Toyoda not be re-elected for a second 12 months in a row, mentioned that he’s liable for the board’s lack of independence and likewise 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 corporations 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 remains to be up 17% for the 12 months so far, outperforming the broader market and including to a acquire 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 car gross sales. It booked a file revenue for the final enterprise 12 months that resulted in March.
“Toyoda needs to be extremely thought to be 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; Enhancing by Edwina Gibbs)
