Opposition to Toyota’s chairman spreads among big shareholders after safety scandals

TOKYO - Opposition to Toyota Motor chairman Akio Toyoda has surfaced among some of the Japanese company’s biggest investors, after a series of vehicle safety scandals gave rise to concerns about his leadership and the future of the world’s biggest carmaker.

Nissay Asset Management voted against all 10 board members in June, including Mr Toyoda, on the grounds their actions were “strongly in opposition to the needs of society”. Such scandals not only hurt public trust but can also damage the market’s valuation of the company, it published on its website.

As big shareholders begin to disclose why and how they voted during Toyota’s annual meeting in June, their criticisms and fears are casting further doubt on Mr Toyoda’s chances of reappointment in 2025.

Domestic banks and brokerages, including institutional investors, account for almost 40 per cent of Toyota’s shareholders. As the largest block, a change of heart among them could have a decisive impact on the chairman’s tenure.

Institutional investors in Japan are encouraged by industry associations to release their voting records to the public, though disclosure often follows by a few months.

Mr Toyoda said in July in a podcast published on the company’s news website that his seat on the board is at risk if shareholder support continues to slide. “No board member in Toyota’s history has seen their support fall so low,” he said in a Toyota Times interview.

Mitsubishi UFJ Asset Management opposed the reappointments of Mr Toyoda as well as vice-chairman Shigeru Hayakawa and president Koji Sato. Top leadership bears the responsibility for vehicle safety scandals at Daihatsu Motor and other Toyota Group companies, it said, adding that an alarm needs to be sounded over issues of governance.

After Mr Toyoda became president in 2009, his shareholder support rarely fell below 90 per cent. That was until government probes uncovered decades of fraudulent vehicle certifications at Daihatsu in December, then at Toyota Industries weeks later and in June at Toyota itself.

Mr Toyoda, the grandson of the company’s founder, saw shareholder support drop to a record low of 85 per cent in 2023, then a further decline to 72 per cent in June. His support was especially low among overseas institutional investors at 33.6 per cent, with domestic investors voting 55.3 per cent in support.

There has been a rapid increase in recent years of shareholders holding executive board members to more stringent standards, according to Tokyo Metropolitan University professor Chieko Matsuda.

Most institutional investors in Japan have already done so, Prof Matsuda said, adding that in the past they may have been more lenient compared with investors abroad, but that is not necessarily the case any more. BLOOMBERG