Toyota Motor Chairman Akio Toyoda's re-election at Tuesday's annual shareholders' meeting seems safe, but a significant further drop in shareholder support could push the company to accelerate governance reforms.
Ahead of this year's annual shareholders' meeting, Toyota and its group companies, including the small car manufacturer Daihatsu and truck division Hino Motors, were embroiled in certification testing scandals.
Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis advised against re-electing Akio Toyoda, citing concerns over governance and board independence. Since then, another testing scandal has emerged.
Akio Toyoda's support rate fell from 96% in 2022 to 85% last year, but he only needs a majority vote to be re-elected. Despite the scandals, the company's business remains strong.
As the grandson of Toyota's founder, Akio Toyoda has served on the board since 2000, making him the longest-serving director. He is expected to garner support from individual investors as well as the numerous suppliers and shareholders within the Toyota group.
"I don't think Mr. Akio Toyoda will not be reappointed," said James Hong, head of mobility research at Macquarie. "However, the drop in support will serve as a yellow card warning to management."
Hong added that actions Toyota might take to address governance criticisms include accelerating the unwinding of cross-shareholdings, particularly in non-automotive companies such as financial firms or the telecom company KDDI.
