Toshiba Corp. (TYO: 6502) shareholders voted down the reappointment of the board chairman at the annual shareholders meeting on Friday. Mr. Nagayama’s departure marks a high point in extended campaign by the Toshiba Corp.’s largest shareholder, Effissimo Capital Management Pte., to probe the Company’s governance, according to Yahoo Finance.
Toshiba Corp.’s share price dropped 0.6% in response to the developments, but briefly registered a 1.4% gain, shortly after the lunch break, which then evaporated by closing time.
Though a breakdown of the vote was not immediately disclosed, Mr. Nagayama’s removal marked an important victory for corporate governance, sending a poignant signal about overseas investors’ ability to push through their agendas. Institutional Shareholder Services Inc., a U.S.-based corporate governance consultancy, reportedly voiced its opinion that shareholders should reject Nagayama’s reappointment, and 3D Investment Partners, a major shareholder in the Company, said he should step down, according to Japan Times. Toshiba subsequently appointed CEO Satoshi Tsunakawa as interim chairman, and the board said it would undertake a full review of assets and devise a plan to create growth via dividends and buying back shares
A recent probe by lawyers alleged that the conglomerate had sought assistance from the government to influence the voting behavior of foreign shareholders, an allegation to which the government has yet to respond. However, Toshiba is a major producer of defence equipment and nuclear reactors, proving itself to be strategically important to the government, raising concerns about just how the government will look to limit the damage caused by the probe.