TOKYO (AP) – Japanese nuclear and electronics giant Toshiba Corp. faced shareholders on Friday, seeking to shake off serious questions about the governance of the once-revered brand.
After a nearly three-hour meeting, Tokyo-based Toshiba failed to secure shareholder approval for the reappointment of chairman Osamu Nagayama and another board member. The other nine candidates were approved.
The company had withdrawn two nominations in a last-minute attempt to appease disgruntled shareholders.
Nagayama had been pressured to resign after an independent investigation that Toshiba officials agreed with the Japanese government to limit the influence of foreign investors at last year’s shareholders meeting.
Major shareholders and the investment fund Effissimo launched the investigation, alleging that last year’s meeting, at which Effissimo appointed dissenting directors, was not conducted in a fair manner. They demanded Nagayama’s ouster at the meeting on Friday.
“He bears the greatest responsibility in nominating candidates and has the ultimate responsibility for the conduct of the board,” Effissimo said in a report earlier this month.
Besides Effissimo, which owns around 10% of Toshiba’s shares, other foreign investors are 3D Investment Partners and the Harvard University endowment fund.
The investigation included hearings with Toshiba employees and more than 800,000 emails, to see if the vote count had been questionable and if Commerce Department bureaucrats pressured investors on how to vote.
“We take this very seriously,” Nagayama, former managing director of Japanese pharmaceutical company Chugai Pharmaceutical, told investors ahead of the vote. “We will restore transparency, get to the bottom of what happened and prevent a recurrence.”
The turmoil at Toshiba highlights the greater presence of foreign shareholders in Japanese companies.
Toshiba has promised to look into the allegations and take the necessary action.
In a June 18 open letter to shareholders, Nagayama, who also served on the board of directors of Sony Corp., requested support for his reappointment.
“My priority is to provide Toshiba with the governance and leadership that you deserve. I promise you that I will continue to be an agent of positive change, not a protector of the status quo, ”he said.
Satoshi Tsunakawa, who chaired Friday’s meeting, returned as chief executive in April.
His predecessor Nobuaki Kurumatani abruptly resigned following a controversial proposal to acquire Toshiba from the global fund where Kurumatani previously worked, CVC Capital Partners.
The HVAC supply has been suspended. Kurumatani succeeded Tsunakawa as CEO in 2018. Tsunakawa’s reappointment did not meet opposition from activist shareholders.
Toshiba’s fortunes began to crumble because of its heavy investments in nuclear power, although the move was initially announced. After the nuclear disaster of March 2011 in Fukushima, security costs skyrocketed. Toshiba is still in charge of the task of dismantling nuclear power plants in Japan, including that of Fukushima.
Toshiba also suffered massive losses in the nuclear business of US maker Westinghouse, which Toshiba acquired in 2006. Westinghouse filed for bankruptcy in 2017.
Founded in 1875, Toshiba has long been one of Japan’s most successful brands, developing the country’s first radars and microwaves, electric rice cookers and laptops.
He also invented flash memory, the ubiquitous chips in gadgets, from digital cameras to cell phones. Toshiba sold its chips division in 2018, a move that accelerated the presence of more vocal players.
Toshiba, tarnished by accounting scandals in the past, has repeatedly promised to strengthen corporate governance.
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This story has been corrected throughout to show that Osamu Nagayama and another board member failed to get shareholder approval. A previous story said that all of them had been approved.
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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
