California, New York pensions vote against Toyota chairman
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[June 02, 2023] By
David Dolan and Daniel Leussink
TOKYO (Reuters) - Two of the largest U.S. public pension systems have
voted against the re-election of Toyota Motor Corp Chairman Akio Toyoda,
shareholder voting records showed, sharpening the focus on the
automaker's annual meeting later this month.
The California Public Employees' Retirement System (CalPERS) and the
Office of the New York City Comptroller both also voted for a resolution
urging Toyota to improve disclosure of its lobbying on climate change,
according to postings by the funds.
The details of the votes come after two leading proxy advisory firms
last week raised issues about governance at the automaker. One of them,
Glass Lewis, recommended shareholders vote against re-electing Toyoda,
citing what it said was his responsibility for the lack of a
sufficiently independent board.
The disclosures by the public pension systems with a record for activism
underscored the pressure Toyota faces at its annual meeting on June 14
over board oversight and its choice to push electric vehicle (EV)
alternatives, including hybrids like the Prius.
Toyota said on Friday it actively engages in dialogue with shareholders
and investors, and considers the optimal board structure while receiving
opinions and advice.
The world's largest automaker has been a target for climate activists
and green investors in recent years who say it has been too slow to roll
out battery-electric vehicles.
Japanese companies have faced increasing scrutiny from shareholders on
governance although shareholder proposals have struggled in the face of
domestic investors more willing to back boards and cross-shareholdings
by affiliated companies.
Toyota has previously said its board meets governance standards set by
the Tokyo Stock Exchange for independent oversight and it would act with
"objectivity, independence and an ability to conduct appropriate
supervision."
It said Toyoda, the grandson of the company's founder, had been
re-nominated to the board because he would push Toyota's transformation
from auto manufacturing to a company that also provides a range of
"mobility" services.
Toyota's board has recommended shareholders vote against the climate
lobbying disclosure proposal. It said Toyota was committed to carbon
neutrality by 2050 but the company needed the flexibility to make quick
adjustments, including in how it makes disclosures.
Toyota contributes to society through manufacturing, it said, adding it
has been in talks with CalPERS and heard its opinion that outside
directors should account for more than half of the company's board.
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Toyota Motor Corporation President Akio
Toyoda attends a press conference over rigging safety tests by its
affiliate Daihatsu that affected 88,000 vehicles, in Bangkok,
Thailand, May 8, 2023. REUTERS/Athit Perawongmetha
CalPERS, which declined to comment, is the largest U.S. public
pension fund with some $450 billion in assets under management. The
New York comptroller's office oversees a pension system with $243
billion in assets under management.
CalPERS said it had voted about 20 million shares on the Toyota
resolutions, less than 0.2% of the stock on issue, but it is an
influential voice among global investors.
The New York City pension funds held 6.7 million shares in Toyota
Group companies, including Toyota Boshoku and Toyota Tsusho as of
end March. It was not clear what share of that was Toyota Motor
Corp.
Toyota shares closed up 3.4%, outperforming the 1.2% gain in the
Nikkei index.
The company's shares have returned 13% including dividends this
year, underperforming the broader index, which returned 21%.
BOARD INDEPENDENCE
New York City Comptroller Brad Lander said the Toyota board was not
adequately independent, in a statement explaining the vote by the
funds it oversees.
"A board that is genuinely independent of management and
appropriately focused on maximizing long-term shareholder value, can
strengthen and affirm Toyota's commitment to electric vehicles," he
said.
The New York pension system has also urged both Ford and General
Motors to move rapidly toward electrification and to disclose more
about their lobbying on vehicle standards.
Toyota has said its approach to rolling out a range of alternatives
to gasoline-engine cars - including hybrids, plug-in hybrids,
hydrogen and electric vehicles - is better overall for reducing
carbon emissions and more practical than switching to EVs alone.
In April, the automaker sold 8,584 EVs worldwide, including its
Lexus brand, accounting for more than 1% of its global sales in a
single month for the first time. It seeks to sell 1.5 million EVs
annually by 2026.
(Reporting by Daniel Leussink, David Dolan and Maki Shiraki in
Tokyo; Writing by Kevin Krolicki; Editing by Jamie Freed and
Christopher Cushing)
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