In Rare Rebuke, Toyota Chairman’s Investor Support Tumbles

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Investor support for Toyota Motor’s longtime leader, Akio Toyoda, sank to its lowest level since he took the helm as shareholders challenged the extent of control he exerts over the company.

According to a filing released on Wednesday, 71.9 percent of shareholders supported renominating Mr. Toyoda as chairman of Toyota’s board. That met the threshold required for re-election, but it was the lowest level of support for him since at least 2010, after Mr. Toyoda’s first full year as chief executive.

“In the context of corporate Japan, it’s a surprising figure,” Hirotaka Uchida, partner at the consultancy Arthur D. Little, said of Mr. Toyoda’s renomination vote result. Shareholders want to see changes made to Toyota’s governance and the level of influence Mr. Toyoda holds within the company, he said: “That has been made quite obvious.”

Traditionally in Japan, board members receive nearly unanimous support from shareholders, and Mr. Toyoda, whose grandfather founded the company, has gotten an average approval of more than 96 percent over the past decade. But that national trend has started to change in recent years, with more investors using their votes to pressure companies to enhance profitability and corporate governance.

Ahead of Toyota’s shareholder meeting on Tuesday, The New York Times reported that several big investors planned to vote against Mr. Toyoda’s reappointment. They questioned whether recent problems with mishandled vehicle tests might indicate broader governance issues within Toyota, including inadequate checks and balances on management.

“Toyota’s shareholders have now sent a strong signal that better governance is needed at the very top of the company,” said Anders Schelde, chief investment officer at AkademikerPension, a Danish fund. “We share the concerns expressed and expect the chairman to reflect on the best interest of the company when deciding his next move.”

Mr. Uchida of Arthur D. Little said there is very little chance that this year’s lower approval rating would lead to something as big as Mr. Toyoda stepping down. “But it may mean that he takes a step back, at least from public view,” he said.

During Toyota’s annual meeting at its headquarters in Toyota City, southwest of Tokyo, Mr. Toyoda defended his active role within the company. He said he would assume responsibility for addressing the problems within Toyota that led it to violate vehicle-certification tests.

Mr. Toyoda’s comments reflected his enduring view of himself as a leader who, after guiding Toyota through numerous challenges during his nearly 14-year tenure at the top, continues to serve as a “rear guard,” shielding the company from setbacks so that others can maintain forward momentum.

According to figures released on Wednesday, 95.4 percent of shareholders voted in favor of Koji Sato, who took over from Mr. Toyoda as chief executive last year. That was slightly below last year’s figure, 96.8 percent.

Toyota said in a statement that it was strengthening its governance practices and had clarified the roles and expectations of its executives and redefined how it assesses the independence of directors.

“We perceive the approval rates at this year’s shareholders’ meeting as candid feedback from institutional investors,” Toyota said. “Moving forward, we will continue to value dialogue with our shareholders, sincerely taking their feedback to heart and addressing it.”



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