Toshiba's chairman says wants to stay on, says new directors needed
Toshiba Corp's chairman of the board on Monday pushed back against investor calls to resign, saying he wanted to help right the crisis-hit Japanese conglomerate and would bring in new directors.
Toshiba has come under fierce scrutiny after an independent
investigation last week revealed management colluded with Japan's powerful
trade ministry to block foreign investors from gaining board influence, in what
one leading shareholder has called the world's worst corporate scandal in a
decade.
In response to the investigation, the once-storied
conglomerate said over the weekend it would no longer be putting forward the
names of two directors for re-election and that two other executives would also
resign.
Those changes were not enough for proxy advisory firm
Institutional Shareholder Services Inc (ISS) which on Monday reiterated that
Board Chairman Osamu Nagayama should step down - a call that has been echoed by
other investors.
At a news conference, Nagayama apologised and said there
were lapses in governance, but the former pharma executive said he wanted to
stay on and help reconstruct management at Toshiba.
The company needs directors with a "global
perspective" and a background managing similar firms, he said, adding
Toshiba would call an extraordinary general meeting and speed up plans for a
strategic review.
Toshiba said on Sunday the chair of its audit committee,
Junji Ota, and another committee member, Takashi Yamauchi, will retire as
directors. The audit committee has come under criticism from investors for
failing to take action even after its members became aware of the collusion
against shareholders.
The two other company executives who will depart allegedly
reached out to the Ministry of Economy, Trade and Industry (METI) seeking
support in Toshiba's battle against foreign shareholders over board nominees
ahead of an annual general meeting last July, according to the investigators'
report.
Though oft-battered by scandal, as a manufacturer of nuclear
reactors and defence equipment Toshiba remains hugely important to the Japanese
government. Japan's trade minister on Friday denied his officials directed an
adviser to lean on Toshiba's foreign shareholders.
THE BLAME GAME
The shareholder-commissioned investigation has marked an
explosive turn in a long battle between the company's management and foreign
shareholders and has renewed concern about governance in the world's
third-largest economy and its openness to foreign investors.
Toshiba's second-largest shareholder, 3D Investment Partners
- one of the investors that the investigators' report said was targeted by METI
- on Sunday also called for the resignation of Nagayama, Ota, Yamauchi as well
as another audit committee member, Nobuyuki Kobayashi.
Nagayama blamed Toshiba's former CEO, Nobuaki Kurumatani,
for helping pitch the company into crisis.
"There was a somewhat confrontational stance towards shareholders
brewing from some time ago," Nagayama said, when asked about the
responsibility of the former chief executive.
"That's an underlying cause in one sense for the
current state of affairs."
Nagayama on Monday said some of the information detailed in
the investigators' report had been previously been mentioned in an earlier
internal Toshiba report - an acknowledgement that provoked ire from some
investors.
"It rings hollow for Chairman Nagayama...to try and
shift the blame to just Kurumatani alone. If anyone should resign to take
responsibility over the governance failures in monitoring management, it should
be him," said an investor in Toshiba declining to be identified due to the
sensitivity of the matter.
Since the push by activist shareholders this year for
greater accountability, Toshiba has faced and dismissed a $20 billion bid from
CVC Capital. But leading shareholders have called on it to explicitly seek
offers from potential suitors.
Nagayama said the company has not received offers from
private equity funds since CVC but a planned strategic review committee would
be looking at various options including taking Toshiba private.
He added that he wanted to include two of the company's
foreign directors in the four- or five-member committee. Toshiba currently has
four foreign directors among its 11-member board.
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