A Toshiba Corp external board member said the company’s plan to appoint two directors representing activist investors lacks fairness and balance, opposing their election in a shareholder vote this month.
Mariko Watahiki, a former judge who became a Toshiba board member last year, spoke out against the proposed election of two director candidates from Elliott Management Corp and Farallon Capital Management, saying that if they were appointed, activist investors would occupy too much of the board.
Toshiba announced a slate of 13 proposed directors last month ahead of its shareholder meeting scheduled for June 28.
Photo:AFP
“Toshiba has many types of shareholders, such as hedge funds, institutional investors and individual investors, who would seek profits from their investment in different ways,” Watahiki said. “If we take people from just one specific group, it’s impossible to avoid conflicts of interest.”
It is an unusual show of opposition to a board decision by an outside director at one of Japan’s most famous companies. It highlights the tensions that exist within Toshiba as the conglomerate considers its future, including whether to sell itself to private equity.
The board is not unanimously recommending the candidates, Watahiki said, adding that directors linked to activists would be pursuing short-term profit.
Watahiki said that Raymond Zage, another Toshiba director nominated to continue in the role, also once worked for Farallon.
Zage said Toshiba’s nomination committee, which he chairs, went through an extensive review of candidates over a long period.
He said he was specifically asked by the committee and the board to identify shareholder representatives to serve as directors.
The objective of the process was to help rebuild trust with stockholders, he said.
Toshiba last week said it received eight offers to buy out the conglomerate along with two proposals for capital and business alliances as part of its process to solicit strategic options for its future.
While it did not disclose the bidders, Bloomberg reported that Bain Capital, Blackstone Inc and CVC Capital Partners are among buyout firms that were weighing bids.
Toshiba named Eijiro Imai, a managing director at Farallon Capital Japan, as a proposed director candidate, while Nabeel Bhanji, who hails from Elliott, is another.
Watahiki said it is reasonable for Toshiba to have some representation from its activist shareholders, but the balance is not right with the current candidate slate.
Toshiba should give more board seats to people with deeper understanding of its businesses, she said.
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