Four senior Toshiba executives, including two board members, were forced to step down after a heated four-hour emergency meeting on Sunday.
The meeting, which propels one of Japan’s most famous industrial names even deeper into a governance crisis, follows the publication last week of an damning report in the company’s collusion with the government to crack down on activist investors.
the 147-page independent report, which was compiled by outside lawyers, grew out of an unprecedented shareholder revolt and provides explicit details of the “dark arts” campaign orchestrated by Toshiba and officials from the Ministry of Economy, Trade and of Industry (Meti). The report also alleges that the campaign was carried out with the knowledge of Yoshihide Suga, then cabinet secretary – now prime minister – a claim he denied.
The contents of the report horrified several members of Toshiba’s board of directors. On Friday, in a joint statement, four of the non-executive directors said management and the board had taken action “unacceptable and directly contrary to the interests of our shareholders.” In a rare act of rebellion, they said they no longer supported the full slate of director nominees appointed by Toshiba for its annual meeting of shareholders on June 25.
Sunday the same four board members issued a statement saying that they were happy to note that “under the leadership of the president [Osamu] Nagayama, a number of significant changes were announced by Toshiba today ”.
Despite this, several of Toshiba’s biggest shareholders have said privately that they believe the situation requires the chairman of the board to resign – a position that could gain momentum as investors consider voting against it. reappointment of Nagayama and other directors of Toshiba’s board of directors at AGM.
The four ejected Toshiba executives include the chief and a second member of the audit committee who previously misled the board of directors in concluding that there had been no wrongdoing surrounding the annual meeting of 2020 shareholders of the company. According to people familiar with the situation, Sunday’s board meeting debated whether all audit committee members should have, at a minimum, a Chartered Practicing Accountant (CPA) qualification.
Masaharu Kamo and Masayasu Toyohara featured prominently in the report – and among the four leaders now forced to step down. The two leaders dealt directly with the ministry: Toyohara, investigators said, called on the government to “beat up” its most troublesome shareholders.
Kamo, who was poached McKinsey last year alone, was also seen as a key executive behind the group’s recovery plan following an accounting and financial crisis.
The report centered on Toshiba’s 2020 AGM, during which the company’s biggest investors led an effort to vote against Toshiba CEO Nobuaki Kurumatani. He barely survived that vote, but thanks to a process which, according to the independent report, was not “conducted fairly”.
Kurumatani resigned in April, drawing investors’ attention to the board’s promise to appoint a Strategic Review Committee (SRC) to guide the company through its crisis. One of the committee’s most urgent tasks, two of its biggest investors in the FT have said, will be to assess potential offers for the private equity firm following a botched $ 20 billion takeover bid. of HVAC.
Despite several intensified calls from independent board members and investors for Toshiba to appoint the SRC members on Sunday, people familiar with the situation said that still had not happened.
In its first formal declaration Since the publication of the independent report, Toshiba said on Sunday it would take action to identify the root cause of the problems surrounding the 2020 AGM.
“We will clarify responsibilities, take appropriate action to prevent this from happening again and use this experience to improve transparency in our management,” said the statement from Toshiba.