By Daniel Leussink and Maki Shiraki
TOKYO (Reuters) – Toyota Motor (NYSE:) 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 massive drop in shareholder help might 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 firms together with compact automobile maker Daihatsu and truck unit Hino Motors.
Proxy advisory corporations Institutional Shareholder Companies (ISS) and Glass Lewis have beneficial that Toyoda not be re-elected, citing issues over governance and the board’s independence. Since then, one other scandal over testing violations has additionally come to mild.
Toyoda’s approval score 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 help from particular person traders in addition to the numerous suppliers and Toyota group firms amongst its shareholders.
“I do not assume Akio Toyoda-san isn’t being re-appointed,” mentioned James Hong, head of mobility analysis at Macquarie. “It is simply that the approval charge coming down might be a little bit of a yellow flag to administration.”
Hong mentioned that potential motion from Toyota to counter criticism over governance might embrace an acceleration of its efforts to unwind cross-shareholdings, notably shareholdings in non-automotive firms corresponding to finance firms or telecoms agency KDDI (OTC:).
The end result of the vote might be introduced on Tuesday although the approval charge is not going to be disclosed till Wednesday.
ISS has taken subject with the way in which the automaker has handled certification irregularities inside the Toyota group, saying that Toyoda ought to be thought-about “in the end accountable” for the errors.
“It is crucial that the corporate set up acceptable 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 firms.”
Glass Lewis, which is recommending that Toyoda not be re-elected for a second 12 months in a row, mentioned that he’s chargeable for the board’s lack of independence and likewise cited issues about its strategic shareholdings and return on fairness.
Requested in regards to the proxy advisers’ suggestions, Toyota mentioned in an announcement 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 firms to make sure efficient governance.
Toyota’s shares have misplaced 10% because the newest scandal emerged early this month. That mentioned, the inventory remains to be up 17% for the 12 months thus 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 document revenue for the final enterprise 12 months that led to March.
“Toyoda ought to be extremely thought to be he delivered outcomes and led Toyota to progress,” mentioned Koji Endo, head of equities analysis at SBI Securities.