Toshiba shareholders have ousted the chair of the company’s board in a historic vote that tipped one of the country’s most celebrated corporate names into uncharted territory and marked a watershed for investor activism in Japan.
Friday’s decision by shareholders to vote against the reappointment of Osamu Nagayama as chair at the annual meeting was described by some of Toshiba’s largest investors as an inevitable consequence of the company’s long failure to establish better governance.
The vote against the board chair was not only exceptionally rare in a corporate world where management is used to unquestioning support, but it was especially eye-catching as it brought down a widely-respected business leader.
The AGM followed the release this month of an explosive independent report into the events surrounding Toshiba’s 2020 annual meeting. The report alleged collusion between the company and Japan’s government to suppress activist shareholders.
In addition to revealing contacts between Toshiba and Japan’s Ministry of Economy, Trade and Industry over how to deal with shareholders, the report’s findings contrasted with the company’s own efforts to investigate allegations surrounding the AGM.
The report concluded that the 2020 AGM had not been fairly conducted, while Toshiba’s own investigation, under the supervision of its audit committee, found no evidence of company pressure on shareholders.
Since its publication, the independent document has been cited by investors and proxy advisers as a reason to vote against the reappointment of Nagayama, who has been board chair for the past year and heads the nomination committee.
Nagayama was appointed to the roles after the 2020 AGM and was not criticised in the independent report, but investors argued he should be held responsible for the way Toshiba’s own investigation was carried out.
Shareholders also rejected the reappointment to the board of Nobuyuki Kobayashi, another member of the audit committee, at the meeting, which lasted two and a half hours
Before his stint at Toshiba, Nagayama was known for helping Sony’s turnround and turning Chugai Pharmaceutical into a global player through its capital tie-up with Switzerland’s Roche.