Toshiba Corp shareholders voted to oust Osamu Nagayama as board chairman in a rare triumph for activist investors seeking fundamental reform after years of scandal and allegations of mismanagement.
The surprise decision on Nagayama, the 74-year-old outside director some investors opposed publicly, came after a contentious meeting with shareholders that extended for nearly three hours.
His departure marks a high point in the months-long campaign by largest shareholder, Effissimo Capital Management Pte, to probe the company’s governance.
Photo: AFP
An investigation prompted by its efforts uncovered alleged collusion with top government officials to influence last year’s board selection.
Toshiba’s shares closed 0.62 percent lower in Tokyo after initially surging following the vote.
Nagayama’s ouster is highly unusual for Japan’s typically staid and conservative corporate culture. For decades, corporations like Toshiba have been run with what critics say is little regard for the interests of private shareholders.
However, activist investors have gone from largely impotent onlookers to influential voices in the space of just a few years, and the company’s annual general meeting (AGM) was a new milestone.
They have increasingly been flexing their muscle, as corporate governance reforms promoting shareholder value have meant management can no longer so easily dismiss external pressure.
“We hope that today’s AGM marks the beginning of a new era at Toshiba — one that will be marked by a focus on value creation, transparency to all stakeholders and a renewed commitment to building trust with shareholders,” 3D Investment Partners Pte, one of the biggest holders of Toshiba stock, said in a statement.
3D welcomed the changes to the board and indicated its optimism about the firm’s future potential.
The report looking into Toshiba’s governance also marked a rare public account of Japan’s bureaucrats allegedly coordinating with a private company to exert control over foreign shareholders. The 139-page document by three independent investigators outlined how Toshiba management allegedly worked hand in hand with public officials in an attempt to sway the outcome of last year’s AGM. Among the officials named was Japanese Prime Minister Yoshihide Suga.
Ahead of yesterday’s vote, Toshiba CEO Satoshi Tsunakawa — who stepped into the post recently after the departure of under-pressure former leader Nobuaki Kurumatani — endorsed Nagayama’s handling of the current crisis and reiterated his faith in the board chair.
Investors were not convinced that enough was being done to address the serious allegations levied against the company and several of them voiced passionate critiques during the meeting.
“Given Toshiba’s stature as a blue-chip company and the seniority of the government officials and management involved, the vote is a message from domestic investors that malfeasance and shareholder oppression is a matter of the past and will no longer be tolerated,” said Justin Tang (鄧文雄), head of Asia research at United First Partners in Singapore. “This result is a sign of a paradigm shift in Japan and will only embolden activist investors whether foreign or domestic.”
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