Grandson of Toyota founder wins shareholders’ OK to stay in leadership

Toyota shareholders arrive for a meeting in Toyota, Aichi prefecture, central Japan Tuesday, June 18, 2024. . (Kyodo News via AP)

TOKYO, Japan  — Toyota shareholders voted Tuesday in support of all the company’s proposals, including keeping Akio Toyoda, grandson of the Japanese automaker’s founder, as chairman on the board.

Details on the vote tallies were not immediately available. But the company confirmed the majority voted in support of its positions.

A shareholder proposal requesting that Toyota issue an annual report on its climate-related lobbying activities was rejected.

The annual meeting, held at company headquarters in Toyota City, central Japan, has drawn attention because Toyota and other major domestic makers have been embroiled in a scandal centered around fraudulent certification tests for vehicles.

The cheating did not result in recalls or safety problems.

READ: Toyota shareholders demand vote against chairman Toyoda

Still, it’s a major embarrassment for a manufacturer with a reputation for quality whose production methods are studied around the world. Some individual shareholders asked about the scandal during the meeting.

Toyota, which makes the Prius hybrid, Camry sedan, and Lexus luxury models, is at times seen as dragging its feet on climate change.

Under Toyoda, it has pushed a “multi-pathway” approach to ecological vehicles, emphasizing hybrids, which have both a gasoline engine and electric motor, and using hydrogen for fuel instead of focusing on battery electric vehicles.

“The group considers climate change measures to be one of its important management tasks and is fully concentrated on realizing carbon neutrality by 2050,” Toyota said in explaining its recommendation on the shareholders’ vote.

Multi-pathway strategy

It stressed its multi-pathway strategy and argued it was transparent and sincere about various environmental efforts.

The results were expected because Toyota’s biggest shareholders among nearly 1 million are Japanese companies such as banks, insurers, and financial institutions that would be unlikely to challenge the automaker, at about 39 percent ownership of the total shares.

Other corporate entities make up 25 percent, foreign corporate entities nearly 22 percent,  and individual shareholders about 14 percent. Toyota Industries Corp., a group company, is the No. 2 shareholder. Parts maker Denso Corp. is the sixth biggest shareholder.

Last year, Toyoda won re-election with nearly 85 percent of the vote. That was down from 96% in 2022. How much he received this year is still unclear.

READ: Japan automakers including Toyota hit by testing scandal

Toyota officials have repeatedly apologized for the fraudulent vehicle testing, and Chief Executive Koji Sato reiterated the apology at the shareholders’ meeting.

Among proxy groups that wanted a vote against Toyoda was Institutional Shareholder Services, majority owned by the German capital market company Deutsche Borse Group, which advises investors.

ISS said in its proxy report that Toyoda “should be considered ultimately accountable” because his promises for change did not involve a reshuffling of the board, which it believed was needed to prevent a recurrence of errant tests.

It did not oppose the appointments of other board members, including Sato.

Another major shareholder, proxy advisory company Glass Lewis & Co., recommended voting against the reappointments of Toyoda and Shigeru Hayakawa, another top executive, citing similar reasons over the faulty tests that it said raised doubts about the company’s governance and corporate culture.

Hayakawa oversaw appointments of board members, and more independent board members should be added, according to Glass Lewis, based in San Francisco.

Profits doubled

In the fiscal year that ended in March, Toyota’s profits doubled from the previous year to 4.9 trillion yen ($31.9 billion), exceeding its own projections, as vehicle sales surged and a weak Japanese yen inflated its overseas earnings. Toyota remains the world’s leading automaker, with sales of 9.4 million vehicles in the fiscal year that ended in March.

READ: Toyota looks to overhaul EV strategy as new CEO takes charge

Toyota’s stock prices had tripled over the last five years to nearly 3,800 yen ($24) before cascading downward amid its latest troubles. Its shares are now trading at above 3,000 yen ($20).

The improper checks on vehicles, including collision tests, started surfacing last year and were found at Toyota group companies Daihatsu Motor Co., which makes small models, truckmaker Hino Motors, and Toyota Industries, a manufacturer of forklifts and other machinery.

The violations were also at Japanese automakers that aren’t part of the Toyota group, such as Honda Motor Co., Mazda Motor Corp., and Suzuki Motor Corp.

“The issues we are facing today, including carbon neutrality, are challenges that everyone on earth needs to join forces in mind and spirit to tackle together,” Toyoda said ahead of the meeting.

“If we simply don’t know the right answer, let’s start by doing what we think is best.”