Toshiba's deepening confusion Outside director holding the key July 12, 18:25

Toshiba continues to be in turmoil.

The June general meeting of shareholders was an unusual development in which a director who had just been reappointed at the general meeting resigned.

The background was the conflict over accepting directors from “shareholders who say things”.

In the months leading up to the General Assembly, it was the members of the "outside directors", not the president or other officers, who continued to play a leading role in the important personnel decisions.

Resignation immediately after reappointment of an unusual director

On June 28, Toshiba's shareholders' meeting was held, where management turmoil continues.

The general meeting ended with all 13 candidates being passed as directors.

But then something unusual happens.

The resignation of Mariko Watahiki, one of the directors reappointed at the general meeting, was announced.

The statement simply stated, "In order for the board of directors to work together, it is appropriate for them to retire."

What on earth was happening?

Became an outside director of "shareholders who say things"

The beginning of this turmoil was Toshiba's attempt to accept two outside directors from an investment fund, the so-called "shareholders who say things."

The two are Eijiro Imai, an executive of Farallon Capital Management, an overseas investment fund that continues to be in conflict with the company, and Elliott Management, also known as the "strongest activist". Executive Nabir Bungy.

In fact, Toshiba had four outside directors who were appointed after discussions with "shareholders who say things" before the general meeting.

At this general meeting, there was a debate about whether or not to welcome two more people from the "shareholders who say things" to the company.

This table shows the directors decided at the general meeting of shareholders held on June 28.

From within Toshiba, there are only President Shimada and Vice President Yanase, and the rest are outside directors.

Director personnel led by

This time, it was Raymond Zeiji, an outside director, not the company, who led the selection.

He is also one of the major shareholders, who has also worked for the investment fund Farallon.

Mr. Zeiji consists of five outside directors and is also the chairman of the nominating committee that decides important personnel of the company such as the appointment of directors and executive officers.

The details of how Mr. Zeiji chose the two as candidates are not clear.

It is also whispered that there was some sort of negotiation over personnel affairs with "shareholders who say things" in the wake of the extraordinary general meeting of shareholders in March when the company split proposal was rejected.

Mr. Zeiji and other related parties of "shareholders who say things" have been appointed as members of the board of directors in 2017 when Toshiba was in a financial crisis, trying to avoid insolvency and maintain its listing overseas. Because I relied on the investment fund of.

At that time, it received an investment of about 600 billion yen, and it is estimated that about 25% of Toshiba's shares are currently held by "shareholders who say things" on a voting rights basis.

Mr. Watabiki Why did you "wait"?

It was Mr. Watabiki who finally resigned from the board of directors who "waited" for the selection of Mr. Zeiji.

Mr. Watabiki, who is also a lawyer, is a legal expert who has spent 40 years as a judge until he retired as the director of the Nagoya High Court.

Mr. Watabiki expressed his opposition to the appointment of two people from shareholders who say things.

The notice of convocation of the general meeting of shareholders also clearly stated the opposite.

Mr. Watabiki pointed out the following two points as to the reason.

▽ Insufficient "agreement" with the investment fund from which the two were accepted.

Board members appear to have problems with diversity, fairness and balance.

Toshiba has signed an agreement, including confidentiality, with the investment funds of these two mothers.

If you become a director, you will be able to access important management information and buy and sell stocks in an advantageous manner over other shareholders, which is unfair.

To prevent this, the agreement limits the actions of the two directors, but argues that it is inadequate.

In response to Mr. Watabiki's claim, Satoshi Tsunakawa, the former president and chairman of the board of directors, stated that "Mr. Watabiki's opinion is a personal opinion" and rejected the claim.

Under these circumstances, Mr. Watabiki said in our interview, "It's okay if the contract is strictly adhered to, but there may be a way to slip through. We should make sure that the contract is not broken, but that is not enough." I was getting a sense of it.

He felt that he thought he couldn't be overlooked as a lawyer, seeing that "shareholders who say things" could be in a better position than ordinary shareholders.

On the other hand, not all shareholders who say things have the same view.

"Effissimo Capital Management," an investment fund that has been in sharp conflict with Toshiba, is the largest shareholder. I answered the interview.

It's easy to think of them as "shareholders who say things," but in reality, their positions and expectations of Toshiba are very different.

What is the pros and cons of accepting “shareholders who say things”?

This time, at Toshiba, the pros and cons of accepting outside directors from shareholders who say things became an issue.

Outside directors have been introduced in the last 10 years to increase corporate value by increasing management transparency in posts where outsiders, such as those who are not directors of the company, take office. ..

Since last year, it has become necessary to make "one-third of the directors" outside directors, and the role played by the company in decision-making is increasing.

Toshiba is no exception, and in the "company with nominating committee, etc." that Toshiba has adopted, the main roles of the company such as executive personnel, remuneration, and business audit are decided by the committee in which the majority of outside directors are. , You can also dismiss the president.

Professor Hideaki Miyajima of the School of Commerce at Waseda University, who is familiar with corporate governance, points out that since the shareholders who say things hold a lot of shares, this kind of selection may have been unavoidable.

Professor Hideaki Miyajima, School of Commerce at Waseda University

"Since we received funds from activists, this result has been factored in to some extent. As stipulated by the Company Law, listed companies are based on the majority of shareholders. I think it is inevitable that if you own shares, you will want to send an officer. "

On the other hand, Hiroshi Ota, who is known as a leading activist responder, said that it is a general theory that is not limited to Toshiba, and that "shareholders who say things" are involved in management decision-making, so that other shareholders He points out that profits may be compromised.

Hiroshi Ota

"Many institutional investors should think that medium- to long-term growth is desirable. On the other hand," shareholders who say things "have a strong tendency to seek profits from a short-term perspective. There is a problem whether it will be profitable for other shareholders to decide the future of the company from the perspective of "shareholders who say things". "

He points out that the company needs to handle important information with its shareholders and to enter into strict contracts with other shareholders to prevent inequality.

Hiroshi Ota

"To prevent the" shareholder who says things "from getting information from other shareholders as much as possible, and to prevent it because there are places where the interests of general shareholders and activists do not match. We need to take care. I think the entire board should properly discuss whether it is in the interests of all shareholders (accepting directors from "shareholders who say things"). "

At "LIXIL," which is the same company with a nominating committee as Toshiba, and there was a conflict over CEO personnel between top executives from the founding family and professional managers, taking advantage of the reflection that outside directors did not function effectively last year Since then, we have begun a new initiative to evaluate outside directors by conducting interviews with external organizations.

Each company continues to search for ways to face outside directors and utilize them in management.

Strategy recruitment from outside Toshiba's future

Toshiba was confused over the appointment of outside directors.

Now, an unusual procedure is underway to solicit strategies from outside that will lead to an increase in corporate value, including delisting.

So far, eight strategies have been submitted on the premise of delisting the company, and two have been submitted for capital and business alliances while maintaining the listing, and the content of proposals has been narrowed down on the company side. increase.

It takes a huge amount of money to privateize Toshiba's stock with a market capitalization of over 2 trillion yen, and it seems difficult for any investment fund to execute independently, and there are active movements among the investment funds that made the proposal. It has become.

I feel that it is ironic that unlisting is required by the “shareholders who say things” to maintain the listing.

Can the newly elected outside director find a match and create a new appearance for Toshiba?

The outlook remains uncertain.

Reporter of the Ministry of Economic Affairs

Kenta Shimai

Joined in 2012

After working at the Miyazaki and Morioka stations, he is currently affiliated.