Toshiba shareholders sack chairman, shaking Japan Inc

TOKYO, June 25 (Reuters) – Shareholders of Toshiba Corp (6502.T) ousted the chairman of the board on Friday, issuing a powerful rebuke to the company after management colluded with the Japanese government to pressure on foreign investors.

The unexpected impeachment of President Osamu Nagayama, a veteran of Japanese companies, and another director marked a clear victory for corporate governance and sent a strong signal about the ability of foreign investors to push for change, even in one of the most famous conglomerates of Japan Inc.

The board said it will undertake a full asset review and develop a plan to create growth through dividends and share buybacks. He would also engage with potential investors, he said, comments that could spark tensions with the government, which sees Toshiba as a strategic asset.

CEO Satoshi Tsunakawa has been appointed interim chairman, the company said, adding that it recognizes the seriousness of the rejection of the two directors.

“This result signals a paradigm shift in Japan and will only embolden activist investors, both foreign and domestic,” said Justin Tang, head of Asian research at United First Partners in Singapore.

Tsunakawa took over the helm in April after the departure of the former Toshiba CEO, but said he doesn’t plan to stay too long. Evictions of board members from Japanese companies, especially names known as Toshiba, are extremely rare.

But Nagayama’s supporters say his failure to be re-elected will only further delay Toshiba, depriving the industrial conglomerate, which has gone from crisis to crisis since an accounting scandal in 2015, of experienced leadership.

The breakdown of the votes was not immediately disclosed.

The strategic review will be led by Paul Brough, a chartered accountant with experience in mergers and acquisitions as a financial advisor.

A source from Toshiba, who was not authorized to speak to the media, said foreign investors voted in greater numbers than at previous shareholder meetings because they saw it as an important test of corporate governance. company in Japan.


The government’s response has yet to be seen, but so far Commerce Minister Hiroshi Kajiyama has not expressed an apology about his ministry’s relationship with Toshiba, claiming that the policies he has implemented were natural for the ministry.

Toshiba Corp. Board Chairman Osamu Nagayama attends a press conference in Tokyo, Japan on June 14, 2021, in this photo taken and released by Toshiba Corporation. Toshiba Corporation / Document via REUTERS

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Toshiba manufactures defense equipment and nuclear reactors and is strategically important to the government.

“In general, the hope is that corporate governance can be improved through discussions with shareholders and at the same time, we are working to ensure the stable development of companies and technologies that are important from the point of view of the company. national security, ”he said at a regular press conference ahead of the AGM.

On Thursday, Akira Amari, former economy minister and influential lawmaker for the ruling Liberal Democratic Party, accused activist investors of focusing only on short-term profits and called for better oversight of those investors to protect the economic security. Read more


Toshiba shares closed 0.6% lower. The stock is up about two-thirds in value this year, supported by a $ 20 billion bid on the company by private equity firm CVC Capital. Although Toshiba rejected this offer, it promised the strategic review.

Nagayama’s foreclosure could help activist shareholders push the company to consider takeover bids. Since the CVC offer, event hedge funds have been actively buying Toshiba shares, making the shareholder list potentially more favorable for activists, investor sources said.

Nagayama, who was seen as cautious of such offers, did not join Toshiba’s board until mid-2020 after alleged pressure from foreign shareholders to vote in line with the candidates for the election. board of directors.

Former CEO of Chugai Pharmaceutical (4519.T) and director of the board of directors of Sony Group Corp (6758.T), he is well respected and electronics giant and former US Ambassador to Japan John Roos have told him expressed their support.

But his critics have argued that he should resign to take responsibility for the board’s resistance to responding to the allegations.

Shareholder advisory firms Institutional Shareholder Services Inc and Glass Lewis had recommended shareholders not to renew it, while 3D Investment Partners, Toshiba’s No.2 shareholder based in Singapore with a 7.2% stake, had called for his resignation.

3D Investment said in a statement after the outcome that it hopes the AGM marks the start of a new era and looks forward to a constructive and ongoing dialogue with the board and management team. from Toshiba.

Toshiba appointed 11 directors to the AGM, including Nagayama. Nobuyuki Kobayashi, member of the audit committee, was also excluded.

Reporting by Makiko Yamazaki; Writing by Tim Kelly; Editing by Edwina Gibbs

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