Tension at Toshiba erupts into public row as directors trade barbs

Boardroom tensions at Japan’s Toshiba erupted into a public row on Monday as two of its external directors traded criticism over governance and the nomination of hedge fund executives to the conglomerate's board.

The rift is the latest in a long-running crisis that has seen management and shareholders locked in a dispute over the future of the company, once one of Japan Inc's prized assets. It could undermine investor confidence in the board, just ahead of an annual general meeting.

External director Mariko Watahiki on Monday took aim at her colleague Raymond Zage saying he raised concerns about governance at Toshiba when he broke with the board's stance in March and came out in favour of a shareholder proposal that the company solicit buyout offers from private equity.

Watahiki's comments were initially made in an annual business report released on Monday, and echoed by another external director, Katsunori Hashimoto.

Zage's move "damaged shareholder confidence in the board and caused concerns about corporate governance", they were quoted as saying in the report.

Zage defended his actions in a statement to Reuters, saying the criticisms were misleading and that his actions had received a positive shareholder response.

Separate company documents also confirmed that Watahiki, a former high court judge, had objected to two director nominations supported by the board. That came after Reuters on Friday reported she had objected and that the company, in a rare move, would make her objections public.

Zage said in the statement to Reuters: “(It is) inaccurate, incomplete and misleading representing a failure on the part of the authors to consider the substantial positive shareholder feedback as well as the content of substantial discussions at the board on this matter both before and after the public statement.” 

Toshiba declined to comment on the matter.

Zage also chairs the nomination panel, which proposed the two board candidates — from US activist hedge funds Elliott Management and Farallon Capital Management — formally opposed by Watahiki.