Toshiba ballot tees up a fresh Japan litmus test

2 minute read

Toshiba Corp. demonstrates its communications android named Ms. Aiko Chihira that can use sign language and introduce itself, at the Combined Exhibition of Advanced Technologies (CEATEC) JAPAN 2014 in Chiba, east of Tokyo, October 7, 2014. Over 500 companies and organisations are exhibiting at CEATEC JAPAN 2014, which will be held until October 11, 2014. REUTERS/Issei Kato (JAPAN

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MELBOURNE, June 27 (Reuters Breakingviews) - Some shareholder votes are more telling than others. The one scheduled at Toshiba (6502.T) on Tuesday will say a lot, about both the scandalised company itself and Japan’s broader efforts to improve corporate governance.

Last month, the $18 billion industrial conglomerate looked ready to move further beyond its troubled past. It backed board candidates from pushy hedge funds Elliott Management and Farallon Capital to join a new 13-member board, a decision which might have rebuilt some trust with long-aggrieved investors. Then it helped organise a press conference to broadcast another director’s opposition to them, undermining the effort.

Mariko Watahiki has been vocal in her resistance read more to Nabeel Bhaji, Elliott’s candidate, and Eijiro Imai from Farallon. In the context of Toshiba’s history, her unexpected disapproval of them and of Raymond Zage, the nomination committee chairman and former Farallon employee, suggests factions may be seeking to subvert attempts to sell the company read more . Offers from buyout shops, including Bain and Blackstone (BX.N), and others may come in as high as 7,000 yen a share, Reuters reported read more last week.

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Board disagreements are to be expected. For the company to draw attention to them is something else altogether, especially given Toshiba’s massive trust deficit; an independent investigation last year found executives colluded with the government to put pressure on one of its shareholders.

Toshiba Chair Satoshi Tsunakawa said Watahiki’s comments were her personal views and did not affect the company’s support for Bhaji and Imai. Proxy advisors ISS and Glass Lewis endorsed both candidates, with Glass Lewis noting that Watahiki’s allegations “fall somewhere between confounding and concerning.”

The question is where domestic fund managers such as Dai-ichi Life Insurance (8750.T), Nippon Life Insurance and Nomura Asset Management – which owned about a quarter of Toshiba in March 2021 – stand. They typically vote with management. If they dissent, however, it might be indicative of a bold whisper campaign that also undercuts the sale process. Toshiba boss Taro Shimada also would find himself back brawling with shareholders, and reforming Japan Inc will have taken another step sideways.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)


Toshiba’s annual general meeting of shareholders is scheduled for June 28.

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Editing by Pete Sweeney and Thomas Shum

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