TOKYO -- Toshiba will accelerate its efforts to diversify its board members and enhance its governance in a bid to regain shareholder trust in the wake of a probe that found the company colluded with a government ministry to pressure activist shareholders.
On Monday, Chairman Osamu Nagayama told reporters that the company aims to reassemble its board to include more foreigners and new voices, with the aim to "strengthen the board."
"We will hold discussions with shareholders and take their opinions into account during the process to reconstruct the board," Nagayama said, explaining that an extraordinary general meeting will be held at some point to elect new candidates.
The Japanese conglomerate's long-running row with activist shareholders resurfaced last week following an independent investigation into the company.
The probe, conducted by three lawyers, revealed how Toshiba's management colluded with Japan's Ministry of Economy, Trade, and Industry in an attempt to pressure activist shareholders. The probe concluded that Toshiba's annual general meeting last year was "not fairly managed."
Following the probe, Toshiba on Sunday held an emergency board meeting and removed two of its directors from its list of board nominees for this year's annual general meeting, scheduled to take place on June 25.
"Given the investigation report, it was decided that it would have been difficult to receive understanding from shareholders regarding [Junji] Ota and [Takashi] Yamauchi's reappointment," Board Chair Osamu Nagayama says. (Screenshot from Toshiba's YouTube page) The two were audit committee chair Junji Ota and audit committee member Takashi Yamauchi. Both will retire from Toshiba's board at the shareholder meeting.
"Given the investigative report," Nagayama said, "it was decided that it would have been difficult to receive understanding from shareholders regarding Ota's and Yamauchi's reappointments."
Ota and Yamauchi were a part of the audit committee when Toshiba conducted its own review of the July shareholders meeting, which found no problems.
Along with Ota and Yamauchi, two Toshiba executives that were named in the probe will also step down at this month's AGM.
Toshiba now has 11 board member candidate nominees, including President and CEO Satoshi Tsunakawa and board chairman Nagayama.
Nagayama also criticized former CEO Nobuaki Kurumatani, who abruptly resigned in April.
He stated that Toshiba lacked governance, including in its relationship with METI as stated in the investigation, and noted that "the existence of Mr. Kurumatani was one factor that cannot be denied. Aside from his legal responsibility, we cannot ignore his role in causing the current management chaos and undermining the trust of shareholders."