Opposition to Toyota's Chairman Akio Toyoda spreads among big shareholders

By Masatsugu Horie

Opposition to Toyota Motor Corp. Chairman Akio Toyoda has surfaced among some of the Japanese company’s biggest investors, after a series of vehicle safety scandals gave rise to concerns about his leadership and the future of the world’s biggest carmaker.

Nissay Asset Management Corp. voted against all 10 board members in June, including Toyoda, on the grounds their actions were “strongly in opposition to the needs of society.” Such scandals not only hurt public trust, it published on its website, but they can also damage the market’s valuation of the company.

As big shareholders begin to disclose why and how they voted during Toyota’s annual meeting in June, their criticisms and fears are casting further doubt on Toyoda’s chances of reappointment next year. Domestic banks and brokerages, including institutional investors, account for almost 40 per cent of Toyota’s shareholders. As the largest block, a change of heart among those ranks could have a decisive impact on the chairman’s tenure.

 

Institutional investors in Japan are encouraged by industry associations to release their voting records to the public, though disclosure often follows by a few months.

Toyoda himself said in July during a podcast published on the company’s news website that his seat on the board is at risk if shareholder support continues to slide. “No board member in Toyota’s history has seen their support fall so low,” he said during a Toyota Times interview.

Mitsubishi UFJ Asset Management Co. opposed the reappointments of Toyoda as well as Vice Chairman Shigeru Hayakawa and President Koji Sato. Top leadership bears the responsibility for vehicle safety scandals at Daihatsu Motor Co. and other Toyota Group companies, it said, adding that an alarm needs to be sounded over issues of governance.

After Toyoda became president in 2009, his shareholder support rarely fell below 90 per cent. That is until government probes uncovered decades of fraudulent vehicle certifications at Daihatsu in December, then at Toyota Industries Corp. weeks later and in June at Toyota itself.

Toyoda, the grandson of the company’s founder, saw shareholder support drop to a record low of 85 per cent last year, then a further decline to 72 per cent in June. His support was especially low among overseas institutional investors at 33.6 per cent, with domestic investors voting 55.3 per cent in support.

There’s been a rapid increase in recent years of shareholders holding executive board members to more stringent standards, according to Tokyo Metropolitan University professor Chieko Matsuda. Most institutional investors in Japan have already done so, Matsuda said, adding that in the past they may have been more lenient compared to investors abroad, but that’s not necessarily the case anymore.

Sumitomo Mitsui DS Asset Management Co. also opposed the reappointment of Toyoda and Hayakawa. They chose not to go against Sato, however, owing to the short amount of time that had passed since he became CEO in April 2023.

Repeated scandals made Fukoku Capital Management Inc. go from voting in support of the two executives at last year’s shareholder meeting, to opposing them this year due to “the grave impact they’ve had on society.”

Many shareholders voted to reappoint Toyoda, but some cases stood out because they did so after meeting with the carmaker’s leadership to discuss its response to recent scandals. Nippon Life Insurance Co. voted for the entire board after speaking with Toyota to confirm it had dealt with the scandals, its root causes and determined who was responsible.

Nikko Asset Management Co. praised Toyota’s plans to reevaluate and refresh the carmaker’s internal corporate culture, voting in favor of the board and its promises of reform. Mitsubishi UFJ Trust & Banking Corp. said it had “no issues in particular,” and voted in favor of the entire board.