Toshiba should overhaul its board and management, says major Japanese pension funds

Tokyo-Toshiba’s proposal to split into three companies does not solve governance issues, and conglomerates should prioritize a review of the board and management, said senior executives at Japan’s largest pension fund.

Ken Kitago, director of corporate governance at the Pension Fund Association (PFA), said the interests of Toshiba’s management and shareholders are “mismatched.”

“The most legitimate solution to the discrepancy is to invite someone who can monitor and discipline management to the board and let the redesigned board choose a new CEO,” he said. Said in a written answer to the question.

Hokugo declined to comment on how PFA, a privately owned Toshiba stake, would vote for a conglomerate plan to split into three companies that house energy and infrastructure, electronics and flash. rice field. Memory chip assets.

Nonetheless, his comments highlight widespread shareholder concerns about Toshiba and represent a rare public announcement from an influential Japanese pension fund.

PFA, which provides benefits to those who have retired from employee pensions, is one of the largest pension funds in Japan with assets of 12.5 trillion yen ($ 108 billion).

However, foreign shareholders, who were found to have collusion with the Ministry of Trade in a shareholder commission last year to slow down their influence, have expressed concern as they have a close relationship with Toshiba’s management.

Toshiba said in a statement to Reuters that the board and management firmly believe that the dissolution plan is “the best way to add value to stakeholders.”

Mr. Kitago pointed out that Olympus and JSR, a chip material maker, have improved, and both invited shareholder Value Act Capital to the board. “As a result of overhauls by ValueAct partners, their corporate value has skyrocketed,” he said.

Some Toshiba shareholders have told Reuters that they are urging the company publicly or privately to conduct a more in-depth review that takes into account potential private equity bids.

During the five-month strategic review prior to the decision to split, Toshiba was unable to formally seek a takeover offer, giving the impression that the split was a natural conclusion for management, Hokugo said. He said.

He also said that it is understandable that some shareholders want to see private equity transactions because making Toshiba private will enable drastic measures that are impossible for listed companies.

Hokugo also emphasized that it should be up to shareholders, not management, to decide on the best options for increasing corporate value.

Toshiba plans to hold an extraordinary shareholders’ meeting in March to measure shareholder support for the proposed split, but the exact date and criteria for shareholder approval have not yet been determined.

Also, from February 7th to 8th, we will explain to investors the business strategy of the company created from the split.

Due to years of accounting scandals and governance issues, Toshiba’s market value has grown from more than half to about $ 18 billion since its peak in the early 2000s.

($ 1 = 115.4500 yen)

Makiko Yamazaki