In a surprising turn of events, several key investors of Toyota Motor Corp TM have voiced their intention to vote against the re-election of former CEO Akio Toyoda to the board of directors.
What Happened: These investors are apprehensive about Toyoda’s continued influence over the company, despite his resignation as CEO in 2023, The New York Times reported on Monday. Toyoda, who spearheaded Toyota’s rise to the pinnacle of the automotive industry during his 14-year tenure, is perceived by some board members as having too much-unregulated influence within the company.
Toyoda’s gamble on hybrid gas-electric vehicles last year led to Toyota recording the largest annual profit in Japanese history. However, his ongoing involvement in significant projects has sparked concerns about the necessity for more independent board supervision.
“You have a case of a particularly empowered executive sitting in a chairman's role,” said Michael Garland, the head of corporate governance at the New York City Comptroller's Office.
“Toyota's need for more independent board oversight is significant.”
"Not having ample checks and balances is just bad governance, but course correct too much and a company can just lose its momentum completely," said Howard Yu, director of IMD Business School's advanced management program.
"Toyota is at this critical juncture."
The company’s annual shareholder meeting, where the vote will occur, is set for Tuesday.
Why It Matters: This development comes in the wake of a series of events that have put Toyota under the spotlight. Earlier this year, Toyoda projected that battery electric vehicles (EVs) would secure no more than 30% of the global automotive market share. He suggested that hybrids, hydrogen fuel cell vehicles, and conventional fuel-burning cars would dominate the rest of the market.
Moreover, Toyota has recently been embroiled in a certification crisis that extends beyond Japan and could impact its operations in the European Union. The company was found to have discrepancies in its vehicle certifications that conflict with United Nations standards, leading to a halt in the sales and deliveries of six models in Japan.
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Price Action: On Monday, 193.62 -3.51 [-1.78%
Photo by RYO Alexandre on Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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