Chairman of Toyota Akio Toyoda Re-Elected Despite Concerns About Governance

Despite the resistance of proxy advisers, Toyota Chairman Akio Toyoda was re-elected with an 85% approval rate, down from 96% in 2022.

Chairman Akio Toyoda and nine other board members were re-elected on Tuesday at Toyota’s annual general meeting, despite worries about governance and certification test controversies from certain shareholders and proxy advisers.

Given his popularity with Japanese retail investors and the sizeable stakes in the automaker held by other Toyota group companies, Toyoda’s reappointment was generally anticipated. In addition, he benefited from the company’s exceptional stock performance and record business success from the previous year.

Toyoda’s approval rating, which was 96% in 2022, dropped to 85% last year. Any appreciable decline in shareholder support may prompt additional governance reform measures, such as the dissolution of cross-shareholdings.

Institutional Shareholder Services (ISS) and Glass Lewis, proxy advisers, had advised against Toyoda’s re-election, citing issues with the board’s return on equity, strategic shareholdings, and lack of independence. The public employee pension funds of New York City abstained from voting for Toyoda, citing the need of “setting a tone at the top.”

In spite of this, individual investors—who make up 12.6% of the automaker’s shareholders—continue to favor Toyoda. Hidenori Takahashi, an 84-year-old shareholder, stated that he supported Toyoda and referred to Toyota as the “best company in Japan” for investors.

A quarter of Toyota’s owners are foreign investors, and they are expected to be the source of any serious opposition to Toyoda’s candidacy when the final shareholder tally is revealed on Wednesday.