Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Toyota chair Akio Toyoda was re-elected by shareholders on Tuesday but was forced to defend himself and the world’s largest carmaker against a string of questions about governance issues.
Toyoda won support at the annual meeting on the back of record profits and a hybrid vehicle boom after the world’s two most powerful proxy advisers — ISS and Glass Lewis — recommended a vote against him over vehicle testing and emissions data issues at group subsidiaries.
Although the exact level of backing Toyoda received will not be provided by the company until Wednesday, some analysts expect it to be about 10 percentage points lower than the 85.7 per cent he garnered last year, which was a drop from 96 per cent in 2022.
Rising calls for investors to vote against the reappointment of Toyoda were seen as part of a broader wave of more assertive shareholder activism hitting corporate Japan, with record levels of proposals from them coming alongside soaring share buybacks by companies.
Toyoda, one of Japan’s most powerful businessmen, is facing his biggest challenge from shareholders since taking over the group as president in 2009. He stepped down from the position in April last year to become chair.
People close to the company said there was growing concern within and outside the group that the grandson of the Toyota founder had gained too much control and executives had insufficient power to question his decisions.
One shareholder at the meeting, who gave his name as Goto, said he was worried about internal controls and governance. “I have this concern,” he said. “Is Toyota OK?”
Toyoda replied: “Governance for me is not to control everything, not to manage everything. Governance for me means that everyone has some independence and autonomy to act in their own responsibility at the gemba,” a reference to the Japanese phrase for the factory floor and the group’s subsidiaries.
Foreign shareholders are increasingly looking to hold companies to account. Several fund managers had told the Financial Times they planned to vote against the chair’s reappointment, intending to do so before the proxy advice was issued.
But Toyoda’s support still appears strong among Japanese retail investors, who credit him for the group’s impressive financial performance. In pouring rain outside the meeting in the city of Toyota, many said they had voted for the chair because of the group’s strong results.
Japanese bosses have generally felt obliged to stand down if they fail to secure more than 60 per cent support, and the perceived risk of companies suffering a shareholder revolt is rising.
Looming over the current season of annual meetings is last year’s so-called Canon shock, the near-defenestration of the company’s CEO, chair and former head of Japan’s powerful Keidanren business lobby, Fujio Mitarai.
The company’s attempt to install an all-male board prompted investors to express their discontent, with a razor-thin reappointment vote of just 50.59 per cent in favour.
Also on Tuesday, for the second year in a row, Toyota shareholders rejected an investor proposal — opposed by the company — urging greater disclosure of climate lobbying.
Climate campaigners have long been critical of what they perceive to be Toyota’s slow pace of transition to electric vehicles, with the company defending its ongoing investment in multiple technologies, including internal combustion engines.
“Pressure on Toyota’s management team has been growing for years because of the company’s insufficient electrification efforts, among other factors,” said Greenpeace east Asia campaigner Mariko Shiohata.
