Investors oust board chair
Shareholders of the scandal-plagued industrial giant Toshiba threw out the company’s board chairman Friday, a breakthrough for foreign investors who have been pushing to make Japan’s insular corporations more transparent and accountable.
The ouster of the chairman, Osamu Nagayama, 74, followed an investigation that revealed that top Toshiba executives had worked with the Japanese government to inappropriately pressure investors who sought to shake up company management.
The resulting scandal led to the resignation of the company’s CEO and four board members. But Nagayama, who was not implicated in the investigation, had stayed on, arguing that he had a responsibility to clean up Toshiba’s governance. In rejecting Nagayama’s appeal and ousting him a year into his tenure, shareholders scored a surprise victory in a country where corporations have long viewed efforts by investors to influence management as unwelcome meddling, even when they are aimed at improving business practices and profitability.
It is “a turning point where shareholders will increasingly hold directors accountable not simply for attending meetings, but for making sure the board is functioning effectively,” said Nicholas Benes, head of the nonprofit Board Director Training Institute of Japan.
“It is a win for both corporate governance and activists in Japan, and is likely to encourage more activists,” he said.
While shareholder interventions in business management have long been common in other wealthy countries like the United States, foreign activist investors suffered defeat after defeat in skirmishes with corporate Japan through the 2000s.
Toshiba, once a crown jewel of Japanese industry, has seen its reputation dramatically diminish in recent years. While it pioneered the laptop computer and invented flash memory, it no longer has much of a presence in the consumer market, with much of its business now focused on industrial projects and infrastructure, such as nuclear power.