Securing the support of only 15% of a target constituency would often be regarded as a failure in any other field. This is how Toyota Motor can explain why so few of its stockholders voted against reelecting Akio Toyoda to its board of directors on Wednesday. Toyoda took the helm of the $270 billion Japanese automaker this year after serving as its CEO for more than ten years. But it might be the new win-win when it comes to corporate governance.
Regarding the same topic, two significant proxy advisory firms adopted various positions. Toyota complies with the rules established by the Tokyo Stock Exchange, but according to Glass Lewis and ISS, there aren't enough really independent directors on the board. Glass Lewis decided that Toyoda should be held accountable and advised investors to vote against him. Masahiko Oshima, for instance, is an executive at the firm's largest lender, Sumitomo Mitsui Financial. According to ISS analysts, three candidates from outside should be viewed as "affiliated" due to present or prior connections they have with the company. But ISS refrained from recommending that shareholders reject them because doing so would put owners at danger of increasing management control of the board. Likewise, Toyoda received their approval.
The vote may have been split by these opposing recommendations. There is, however, an unspoken guideline for interpreting these totals. For a director to feel completely secure, they should receive the support of at least 95% of voters. It will draw attention that Oshima scored 92%. Toyoda mustered an embarrassing 85% support, to put it simply. A lack of transparency rather than strategic issues, such as the company's plans to launch solid-state batteries along with other technologies to enhance the performance and reduce the costs of electric vehicles in the future, is suggested by the fact that his poor performance coincides with a 26% increase in the carmaker's stock this year, which is only slightly less than the Nikkei 225 Index.
That does not mean Toyota and its chair are exempt from criticism. The Office of the New York City Comptroller and the California Public Employees' Retirement System, two outspoken foreign institutional shareholders who are increasingly pressuring firms to bring up their game on climate change and governance, have denounced them for doing so. As a behind in both areas, Toyota is currently under pressure to win back influential investors.