TOYOTA CITY, Japan — Toyota Chairman Akio Toyoda and nine other board members were re-elected at the annual general meeting on Tuesday despite concerns about governance and certification test scandals. While two leading proxy advisers recommended against Toyoda’s re-election, his re-appointment was expected due to support from other Toyota group firms, strong business results, and popularity among Japanese retail investors.
Any significant decrease in shareholder support for Toyoda, to be disclosed on Wednesday, could prompt further governance reforms. Analysts suggest efforts to unwind cross-shareholdings may accelerate as a result.
Toyoda’s approval rating dropped to 85% last year, following safety and certification testing violations at Daihatsu and the parent company. Institutional Shareholder Services (ISS) criticized Toyota’s response to these issues.
New York City’s public employee pension funds voted against Toyoda, echoing the need for impactful leadership. Glass Lewis also recommended against Toyoda’s re-election citing concerns about board independence, strategic shareholdings, and return on equity.
The opposition to Toyoda likely came from overseas investors, comprising a quarter of Toyota’s shareholder base. However, Toyoda’s strong rapport with retail investors and the company’s record profits and stock performance have bolstered his position.
Despite ongoing certification issues, shareholders like 84-year-old Hidenori Takahashi remain confident in Toyota’s value. While more certification irregularities have surfaced recently, Toyoda and CEO Koji Sato have offered apologies without directly addressing proxy advisers’ recommendations.
In addition to the certification problems, shareholders rejected an investor proposal on greater disclosure of climate lobbying, highlighting Toyota’s stance on such matters. Toyota’s shares have fluctuated post-revelations but remain positive for the year.
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