I often wonder why it is that Japanese executives have not committed suicide for quite some time. The old ways are surely gone now. In Today’s Japan, scams and corporate greed and doing whatever they want is key. Sounds much like America in 2024.
Toyota Chairman Akio Toyoda is set to face disgruntled shareholders at the company’s upcoming annual meeting on June 18. Two major proxy advisory groups, Institutional Shareholder Services (ISS) and Glass Lewis & Co., are calling for a vote against Toyoda’s reappointment to the board. This comes in the wake of Toyota’s recent scandal involving fraudulent certification tests for vehicles, which has significantly tarnished the automaker’s reputation for quality.
The scandal, which led Toyota to suspend production of three models in Japan, did not involve any safety recalls. However, it has had a substantial impact on Toyota’s stock price, which has fallen from nearly 3,800 yen to above 3,000 yen, resulting in a market value loss of about 3 trillion yen ($18 billion).
📽️ WATCH – TOYOTA SHAREHOLDERS RE-ELECT CHAIRMAN DESPITE GOVERNANCE CONCERNS
Toyota Motor shareholders backed Chairman Akio Toyoda and nine other members of the automaker’s board on Tuesday, despite concerns about governance raised by two leading proxy advisers. pic.twitter.com/AcKwwuMII0
— PiQ (@PiQSuite) June 18, 2024
ISS holds Toyoda accountable, stating his promises for change lack substantial board restructuring, and argues that better communication with workers alone won’t prevent future issues. Glass Lewis echoed these sentiments, emphasizing Toyoda’s failure to maintain proper internal controls and governance across the Toyota Group. Both groups are also critical of Shigeru Hayakawa, another top executive, suggesting the need for more independent board members and transparency, especially concerning Toyota’s lobbying on climate change.
Under Toyoda’s leadership, Toyota has promoted a “multi-pathway” approach to ecological vehicles, focusing on hybrids and hydrogen fuel rather than purely electric vehicles. Despite these efforts, the company’s recent scandals have raised concerns about the corporate culture developed under Toyoda.
On June 18, at Toyota’s annual shareholder meeting, despite opposition from two major proxy advisors, Chairman Akio Toyoda and nine other board members were successfully re-elected. This shows that shareholders have moved past concerns about corporate governance and certification… pic.twitter.com/LGwx0lM80e
— DriveGreenLiveGreen (@DriveGreen80167) June 19, 2024
While Toyoda is unlikely to be ousted due to strong support from major Japanese shareholders and companies like Toyota Industries, the growing scrutiny reflects broader concerns about governance and accountability at Toyota. Last year, Toyoda won re-election with 85% of the vote, a decline from 96% in 2022, indicating some erosion of support.
Despite these challenges, Toyota’s financial performance remains robust. In the fiscal year ending March, profits doubled to 4.9 trillion yen ($31.9 billion), driven by strong vehicle sales and a weak yen boosting overseas earnings. Toyota remains the world’s leading automaker, selling 9.4 million vehicles last fiscal year.
Shareholders deliver vote of confidence to Toyota and Toyoda https://t.co/ucXfcVWUw1
— ➕MagaMiga🇺🇸🇮🇱 (@magametada9941) June 19, 2024
Analysts like Aaron Ho from CFRA Research believe the recent scandal will have only a minor impact on Toyota, attributing the halted production to a short-term issue. He maintains that there are no fundamental problems with the company’s management or culture.
In response to the scandal, Toyoda has emphasized Toyota’s commitment to continuous improvement, recalling his experience dealing with a major recall in the U.S. in 2009. He reassured shareholders and the public of Toyota’s dedication to addressing and correcting any issues that arise.
“We are not a perfect company. But if we see anything wrong, we will take a step back and keep trying to correct it,” Toyoda stated, aiming to restore confidence in the automaker’s commitment to quality and integrity.
Key Points:
i. oyota Chairman Akio Toyoda faces backlash from shareholders at the annual meeting due to recent fraudulent certification tests for vehicles.
ii. Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis recommend voting against Toyoda’s reappointment, citing accountability for the scandal and lack of internal controls.
iii. The certification scandal involved several Toyota group companies and other Japanese automakers, though no safety issues or recalls were reported.
iv. Toyota’s stock has suffered, losing approximately $18 billion in market value, despite the company’s strong performance and leading global sales.
v. Toyoda’s approach to ecological vehicles and company culture is under scrutiny, though he is expected to retain his position due to strong support from major Japanese shareholders.
Susan Guglielmo – Reprinted with permission of Whatfinger News
