Toyota Motor’s longtime leader, Akio Toyoda, faced a significant decline in shareholder support during the company’s recent board election. The approval rating for Toyoda’s renomination as chairman dropped to 71.9%, marking the lowest level of support since at least 2010.
Key Developments
- Shareholder support for Akio Toyoda fell from 85% in 2023 and 96% in 2022 to 71.9% in 2024.
- Major proxy advisers, including Institutional Shareholder Services and Glass Lewis, recommended against Toyoda’s reelection.
- Some prominent investors, such as U.S. public pension CalPERS and Canadian pension investor CPP Investments, opposed Toyoda’s reelection.
Factors Contributing to Declining Support
- Recent vehicle certification test scandals, including issues at Daihatsu
- Concerns about broader governance issues within Toyota
- Questions about inadequate checks and balances on management
- Shareholders’ desire for changes in Toyota’s governance structure
Shareholder Perspectives
Hirotaka Uchida, partner at Arthur D. Little, described the low approval rating as “surprising” in the context of corporate Japan. He noted that shareholders are advocating for modifications to Toyota’s governance and the degree of control Toyoda wields within the organization. Anders Schelde, chief investment officer at Akademiker Pension, stated: “Toyota’s shareholders have now sent a clear message that enhanced governance is necessary at the highest echelons of the company.”
Comparison of Approval Ratings
| Year | Akio Toyoda’s Approval Rating |
|---|---|
| 2022 | 96% |
| 2023 | 85% |
| 2024 | 71.9% |
Toyota’s Response
Toyota acknowledged the feedback from institutional investors and stated in a release:
- The company is strengthening its governance practices
- Roles and expectations of executives have been clarified
- The process for assessing director independence has been redefined
- Toyota will continue to value dialogue with shareholders and address their feedback
Despite the decline in support, Toyoda defended his active role within the company during Toyota’s annual meeting. He committed to taking responsibility for addressing the problems that led to vehicle-certification test violations.While the lower approval rating is unlikely to result in Toyoda stepping down, it may lead to him taking a less prominent public role in the company’s affairs. The outcome of this election underscores the growing trend of investors using their votes to push for improved profitability and corporate governance in Japanese companies.
