Pivotal Toshiba shareholder vote on future of board chairman underway

Toshiba Corp kicked off its annual general meeting on Friday, with shareholders set to decide on whether to keep Osamu Nagayama as board chairman. The vote, expected to be very close, is seen by many as a referendum on corporate governance in Japan.

Nagayama has been under immense pressure to resign after an independent investigation this month accused the industrial conglomerate of colluding with Japan’s trade ministry to block foreign shareholders from gaining influence on the board at last year’s AGM.

Nagayama’s critics say he should take responsibility for the board’s resistance to a shareholder’s call for an independent probe.

3D Investment Partners, Toshiba’s No. 2 shareholders with a 7.2% stake, has called for his immediate resignation, while shareholder advisory firms Institutional Shareholder Services Inc and Glass Lewis have recommended shareholders not reappoint him.

However, Nagayama, a former Chugai Pharmaceutical CEO and Sony Group Corp Board director, is expected to win the backing of many domestic investors, which now make up a greater proportion of Toshiba’s shareholder base after the conglomerate’s reinstatement in the Tokyo Stock Exchange’s Topix index this year brought in more index-linked funds.

Toshiba, which is one of Japan’s few manufacturers of nuclear reactors and makes defence equipment, is of huge strategic importance to the government.