((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Maki Shiraki and Daniel Leussink
Toyota Motor 7203.T Chairman Akio Toyoda may be under pressure from global investors over scandals and governance issues, but he remains popular among family investors who attended the annual shareholders meeting Tuesday.
Mr. Toyoda is expected to be re-elected as president of the world’s largest automaker at the meeting, even though two influential consultancies have recommended voting against him, citing governance problems and certification testing scandals.
The grandson of the company’s founder, Mr. Toyoda still enjoys great popularity among individual shareholders, many of whom congratulate him for leading the company to another year of record profits and strong performance. stock markets last year.
“I bought Toyota shares with my retirement bonus,” Hidenori Takahashi, 84, told Reuters, adding that he believed it was the “best company in Japan” for shareholders.
He said the certification problems that rocked the carmaker were “a bad thing” but that Mr. Toyoda seemed keen to take steps to prevent the misdeeds from happening again.
While Mr. Toyoda faces little risk of not being re-elected, a sharp decline in his approval rating could be an embarrassment for a company that has been the world’s best-selling automaker for four years running.
Mr Toyoda’s approval rating fell to 85% last year, compared to 96% in 2022.
The automaker has been battered by a series of violations of safety standards and other certification tests at Toyota and its group companies, including small car maker Daihatsu. Institutional Shareholder Services (ISS) criticized the automaker’s handling of the issue.
The New York City Employees’ Pension Fund agrees and votes against Mr. Toyoda’s re-election. Michael Garland, who oversees corporate governance for the funds, said the vote against Toyoda was driven by security and compliance concerns.
“It is essential to set the tone at the top,” Garland said in an emailed statement.
Glass Lewis, who is recommending that Toyoda not be re-elected for the second year in a row, said he was responsible for the board’s lack of independence and also raised concerns about strategic ownership and performance equity.
Other certification irregularities have come to light since the proxy advisors made their recommendations.
In early June, Toyota said it had wrongly conducted six different vehicle certification tests in the past, including for three models that were still being sold.
The company said it notably carried out some tests under stricter conditions than those set by the government, which invalidated their results.
Toyota shares have fallen 10% since then, but remain up 18% for the year.
Toyota has previously told Reuters that taking stock of its mistakes has long been ingrained in its corporate culture and that Toyoda will take the lead in reinstilling this culture and working with group companies to ensure effective governance .
A shareholder proposal from the Danish pension fund AkademikerPension is also put to the vote. She asks Toyota to improve disclosure of its lobbying activities on climate change.
Toyota’s board of directors opposed this proposal.
