Investor support for Toyota Motor's long-time leader, Akio Toyoda, has fallen to the lowest level since he took the helm, as shareholders challenge the extent of his control over the company.
According to a filing released on Wednesday, 71.9 percent of shareholders supported renominating Mr. Toyoda as chairman of Toyota's board. That meets the threshold needed for re-election, but it was the lowest level of support for him since at least 2010, after Mr. Toyoda's first full year as chief executive.
“In terms of corporate Japan, this is a surprising statistic,” Hirotaka Uchida, a partner at consultancy Arthur D. Little, said of Mr. Toyoda's renomination vote result. Shareholders want to see changes in Toyota's governance and Mr. Toyoda's level of influence within the company, he added: “That has become quite clear.”
Traditionally in Japan, board members receive nearly unanimous support from shareholders, and Mr. Toyoda, whose grandfather founded the company, has averaged more than 96 percent approval over the past decade. But this national trend has begun to change in recent years, with more investors using their votes to pressure companies to improve profitability and corporate governance.
Ahead of Toyota's shareholder meeting on Tuesday, The New York Times reported that several large investors planned to vote against Mr. Toyoda's reappointment. They questioned whether recent problems involving the mishandling of vehicle tests could signal broader governance issues within Toyota, including inadequate checks and balances on management.
“Toyota's shareholders have now sent a strong signal that better governance is needed at the top of the company,” said Anders Schelde, chief investment officer at Danish fund Akademikerpension. “We share the concerns expressed and hope the chairman will consider the company's best interests when deciding his next step.”
Mr. Uchida, of Arthur D. Little, said it was highly unlikely that this year's low approval ratings would cause Mr. Toyoda to step down. “But it could mean he at least takes a step back from the public view,” he said.
During Toyota's annual meeting at its headquarters in Toyota City, southwest Tokyo, Mr. Toyoda defended his active role within the company. He said he would take responsibility for fixing problems within Toyota that led it to violate vehicle-certification tests.
Mr. Toyoda's remarks reflect his enduring view of himself, a leader who, after guiding Toyota through numerous challenges during his nearly 14-year tenure at the top, has continued to serve as a “rear guard,” protecting the company from setbacks so other companies can maintain forward momentum.
According to data released on Wednesday, 95.4 percent of shareholders voted in favor of Koji Sato, who took over as chief executive from Mr. Toyoda last year, down slightly from the previous year's figure of 96.8 percent.
Toyota said in a statement that it was strengthening its governance processes, and had clarified the roles and expectations of its executives, and redefined how it assesses the independence of directors.
“We view the approval rates at this year's shareholder meeting as a clear response from institutional investors,” Toyota said. “Going forward, we will continue to value dialogue with our shareholders, take their feedback seriously, and pay attention to it.”