Toyota governance fight gets stuck in traffic

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The author is a Reuters Breakingviews columnist. The opinions expressed are their own. Refiles to fix story code.

MELBOURNE, May 30 (Reuters Breakingviews) -Governance campaigns against Japanese companies have a hard enough time gaining traction as it is. ValueAct Capital’s two-year campaign against Seven & i 3382.T culminated last week with at best just a third of shareholders backing its four board candidates. Now proxy advisory firms are targeting Toyota’s 7203.T board. But they are hamstrung by their own differing recommendations for the $232 billion carmaker’s shareholders.

ISS reckons three candidates up for re-election aren’t independent directors due to the links their organisations have with Toyota; Masahiko Oshima, for example, is an executive at its top lender, Sumitomo Mitsui Financial 8316.T. Glass Lewis asserts just three of Toyota’s 10 board candidates are unaffiliated, fewer than the one-third the advisory sets as a floor. Toyota insists its board meets the Tokyo Stock Exchange’s independence standards.

Yet ISS recommends backing the candidates anyway as a vote against them risks “increasing management dominance of the board”. Glass Lewis suggests investors blame Chair Akio Toyoda. He should go in any event: having the former CEO of 14 years lead the board is bad governance. The duo also disagree on a shareholder resolution pushing for an annual report on climate lobbying. The proxy advisories’ independence of thought is laudable. It’s also likely to split the vote and hand Toyota an easy victory. (By Antony Currie)

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Editing by Una Galani and Thomas Shum


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