In a move that defies recent criticism, Toyota Chairman Akio Toyoda and nine other board members were re-elected at the company’s annual general meeting on Tuesday. Despite governance and certification test scandals, shareholders displayed strong support for Toyoda.
Two major proxy advisers had recommended against Toyoda’s re-election. However, his return to the board was anticipated due to significant shareholdings by Toyota group firms, record business results, and his popularity among Japanese retail investors.
Analysts warn that a significant drop in shareholder support, details of which will be revealed on Wednesday, could prompt further governance reforms. “A lower approval rating could be embarrassing and might lead to more action on governance issues,” said one analyst.
Toyoda’s approval rating dipped to 85% last year, down from 96% in 2022. This decline followed several safety and certification testing violations at Toyota group firms, including Daihatsu and the parent company.
Proxy adviser Institutional Shareholder Services (ISS) criticised the company’s handling of these problems. “Setting a tone at the top is critical,” said Michael Garland, who oversees corporate governance for New York City’s public employee pension funds. These funds voted against Toyoda.
Glass Lewis, another proxy adviser, had recommended against Toyoda’s re-election for a second year, citing concerns over the board’s independence, strategic shareholdings, and return on equity.
Despite the opposition, Toyoda remains popular among retail investors, who own 12.6% of Toyota’s shares. Last year’s record profits and strong stock performance have bolstered his support.
“I bought Toyota shares with my retirement bonus,” said 84-year-old Hidenori Takahashi. “It’s the best company in Japan for shareholders.”
The final shareholder support figures, expected on Wednesday, will indicate the extent of any dissent and potential future reforms at Toyota.
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