Toshiba shareholders elect to boot chairman after government collusion revelations

Despite Osamu Nagayama pledging to be 'an agent of positive change' earlier this week, Toshiba's shareholders were not compelled to keep him on the company's board.
Written by Campbell Kwan, Contributor

Former Toshiba chairman Osamu Nagayama.

Image: Getty Images

Toshiba chairman Osamu Nagayama has been ousted by shareholders at the company's annual general meeting. 

Another director that was part of Toshiba's audit committee, Nobuyuki Kobayashi, was also ousted during the vote by shareholders.

The annual general meeting held on Friday marked the first time Toshiba shareholders have come together since an independent investigation [PDF], passed by shareholders, revealed the company colluded with Japanese officials to prevent certain shareholders from exercising their voting rights at last year's annual general meeting.

The investigation, conducted by three lawyers, found Toshiba "devised a plan" with Ministry of Economy, Trade and Industry officials to prevent Effissimo Capital Management, which holds 9.9% of Toshiba shares, from exercising certain shareholder proposals at Toshiba's annual general meetings.

"Toshiba's actions directly or indirectly had an undue influence on shareholders with the intention of effectively interfering with the exercise of shareholders' rights at this AGM. Therefore, we believe that this AGM was not fairly managed," the investigation's report said.

At the start of the week, Nagayama penned an open letter stating his "deep regret" about Toshiba's conduct and pledged to be an agent of positive change.

"I would like to express my deep regret regarding recent unacceptable events at the company which have eroded your trust in us," Nagayama wrote in the letter.

"I pledge to you that I will continue to be an agent of positive change, not a protector of the status quo." 

On Friday, Toshiba shareholders were not convinced by Nagayama's pledge, however, as the majority of them voted for Nagayama to step down from the chairman role.

Shareholders also voted on nine other board member nominees, with those nine being allowed to keep their place on the board.

The voting tallies for each board member nominee were not disclosed, with Toshiba only revealing the voting outcomes. 

With two board members being ousted on Friday, Toshiba said details of the changes in directors and officers, including the composition of each committee, would be made based on the results of the resolution at a future board of directors meeting.

"The company recognises the seriousness of the rejection of some candidates for directors," Toshiba added.

On the same day as the annual general meeting, Toshiba also reported it earned operating income of ¥104 billion for the fiscal year ended March 2021, which was a ¥26 billion drop from the year prior.

During the year, Toshiba also saw its employee count be cut by over 8,000 to 117,300.


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