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California, New York pensions vote against Toyota chairman Akio Toyoda


Jun 2, 2023
California, New York pensions vote against Toyota chairman Akio Toyoda


TOKYO — Two of the largest U.S. public pension systems have voted against the re-election of Toyota Motor Corp Chairman Akio Toyoda, shareholder voting records showed, sharpening the focus on the automaker’s annual meeting later this month.

The California Public Employees’ Retirement System (CalPERS) and the Office of the New York City Comptroller both also voted for a resolution urging Toyota to improve disclosure of its lobbying on climate change, according to postings by the funds.

The details of the votes come after two leading proxy advisory firms last week raised issues about governance at the automaker. One of them, Glass Lewis, recommended shareholders vote against re-electing Toyoda, citing what it said was his responsibility for the lack of a sufficiently independent board.

The disclosures by the public pension systems with a record for activism underscored the pressure Toyota faces at its annual meeting on June 14 over board oversight and its choice to push electric vehicle (EV) alternatives, including hybrids like the Prius.

Toyota said on Friday it actively engages in dialogue with shareholders and investors, and considers the optimal board structure while receiving opinions and advice.

The world’s largest automaker has been a target for climate activists and green investors in recent years who say it has been too slow to roll out battery-electric vehicles.

Japanese companies have faced increasing scrutiny from shareholders on governance although shareholder proposals have struggled in the face of domestic investors more willing to back boards and cross-shareholdings by affiliated companies.

Toyota has previously said its board meets governance standards set by the Tokyo Stock Exchange for independent oversight and it would act with “objectivity, independence and an ability to conduct appropriate supervision.”

It said Toyoda, the grandson of the company’s founder, had been re-nominated to the board because he would push Toyota’s transformation from auto manufacturing to a company that also provides a range of “mobility” services.

Toyota’s board has recommended shareholders vote against the climate lobbying disclosure proposal. It said Toyota was committed to carbon neutrality by 2050 but the company needed the flexibility to make quick adjustments, including in how it makes disclosures.

Toyota contributes to society through manufacturing, it said, adding it has been in talks with CalPERS and heard its opinion that outside directors should account for more than half of the company’s board.

CalPERS, which declined to comment, is the largest U.S. public pension fund with some $450 billion in assets under management. The New York comptroller’s office oversees a pension system with $243 billion in assets under management.

CalPERS said it had voted about 20 million shares on the Toyota resolutions, less than 0.2% of the stock on issue, but it is an influential voice among global investors.

The New York City pension funds held 6.7 million shares in Toyota Group companies, including Toyota Boshoku and Toyota Tsusho as of end March. It was not clear what share of that was Toyota Motor Corp.

Toyota shares closed up 3.4%, outperforming the 1.2% gain in the Nikkei index.

The company’s shares have returned 13% including dividends this year, underperforming the broader index, which returned 21%.


New York City Comptroller Brad Lander said the Toyota board was not adequately independent, in a statement explaining the vote by the funds it oversees.

“A board that is genuinely independent of management and appropriately focused on maximizing long-term shareholder value, can strengthen and affirm Toyota’s commitment to electric vehicles,” he said.

The New York pension system has also urged both Ford and General Motors to move rapidly toward electrification and to disclose more about their lobbying on vehicle standards.

Toyota has said its approach to rolling out a range of alternatives to gasoline-engine cars — including hybrids, plug-in hybrids, hydrogen and electric vehicles — is better overall for reducing carbon emissions and more practical than switching to EVs alone.

In April, the automaker sold 8,584 EVs worldwide, including its Lexus brand, accounting for more than 1% of its global sales in a single month for the first time. It seeks to sell 1.5 million EVs annually by 2026.

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