Toshiba chairman ousted in rare display of shareholder power in Japan

Toshiba Corp (OTCMKTS:TOSYY) is part of a paradigm shift in Japan, analysts said, as a band of overseas activist investors led the surprise ousting of chairman Osamu Nagayama.

After a tense three-hour shareholder meeting, which followed years of corporate missteps and scandal, the 74-year-old was voted out.

Nagayama had only been appointed last year and has had to field allegations that its growing band of overseas investors had been pressured to vote in line with the management board’s nominees at the previous annual general meeting.

In March, an emergency shareholder meeting voted to support the appointment of independent investigators to examine the allegations.

Then in April, chief executive Nobuaki Kurumatani, who had tussled with the company’s activist investors, resigned amid controversy over a US$20bn bid from private equity firm CVC Capital Partners, his former employer.

Hedge fund Effissimo Capital Management, the company’s largest shareholder, has led the push to topple the chairman along with fellow Singapore-based major investor 3D Investment Partners.

Prior to the vote, Effissimo said Nagayama “bears the greatest responsibility in nominating candidates and has ultimate responsibility for the conduct of the board”.

Following the vote, 3D said in a statement: “We hope that today’s AGM marks the beginning of a new era at Toshiba – one that will be marked by a focus on value creation, transparency to all stakeholders and a renewed commitment to building trust with shareholders.”

Analysts at United First Partners said: “Given Toshiba’s stature as a blue-chip company and the seniority of the government officials and management involved, the vote is a message from domestic investors that malfeasance and shareholder oppression is a matter of the past and will no longer be tolerated. This result is a sign of a paradigm shift in Japan and will only embolden activist investors whether foreign or domestic.”

Story by ProactiveInvestors