© Reuters. FILE PHOTO: Toyota Motor Corporation President Akio Toyoda attends a press conference regarding falsification of safety tests by its subsidiary Daihatsu that affected 88,000 vehicles, in Bangkok, Thailand, on May 8, 2023. REUTERS/Athit Perawongmitha
Written by David Dolan and Daniel Lusink
TOKYO (Reuters) – Two of the largest public pension systems in the United States have voted against their re-election Toyota Shareholder voting records show Motor Corporation (NYSE::Corp) President Akio Toyoda has increased focus for the automaker’s annual meeting later this month.
Both the California Public Employees Retirement System (CalPERS) and the New York City Comptroller’s Office also voted in favor of a resolution urging Toyota to better disclose its lobbying on climate change, according to publications provided by the funds.
The details of the vote come after two leading dealership advisors last week raised issues about governance at the automaker. One of them, Glass Lewis, recommended that shareholders vote against Toyoda’s re-election, citing what he said was his responsibility for not having a sufficiently independent board of directors.
Toyota on Friday did not immediately comment on the vote against Toyoda’s re-election.
The world’s largest automaker has been a target of climate activists and green investors in recent years who say it has been too slow to roll out battery-powered cars.
The disclosure of public pension systems with an active record highlighted the pressure Toyota faces at its annual meeting on June 14 over board oversight and its selection to drive electric vehicle (EV) alternatives, including hybrids like the Prius.
Japanese companies have faced increasing shareholder scrutiny over governance despite the difficulty of shareholder proposals in the face of domestic investors more willing to support boards and co-sharing by subsidiaries.
Toyota said earlier that its board meets the governance standards set by the Tokyo Stock Exchange for independent oversight and will act with “objectivity, independence and the ability to conduct appropriate supervision.”
It said Toyoda, the grandson of the company’s founder and chairman, had been nominated to the board because he would drive Toyota’s transformation from making cars to a company that also provides a range of “mobility” services.
Toyota’s board of directors has recommended shareholders vote against the climate stress disclosure proposal. She said Toyota is committed to carbon neutrality by 2050 but the company needs the flexibility to make quick adjustments, including how it makes disclosures.
CalPERS, which declined to comment, is the largest public pension fund in the United States with about $450 billion in assets under management. The New York Comptroller’s Office oversees a pension scheme with $243 billion in assets under management.
CalPERS said it voted for about 20 million shares on Toyota’s decisions, less than 0.2% of the shares offered, but is an influential voice among global investors. It was not immediately clear how much of the stake was overseen by the New York Comptroller’s Office.
Toyota shares rose 2.6% in early afternoon trade, outperforming the index’s 1.1% gain.
The company’s shares have returned 11% including the dividend this year, lagging behind the performance of the broader index, which yielded 21%.
Board independence
New York City Comptroller Brad Lander said Toyota’s board was not independent enough, in a statement explaining voting by the funds it oversees.
“A board of directors that is truly independent of management and appropriately focused on maximizing long-term shareholder value can reinforce and underscore Toyota’s commitment to electric vehicles,” he said.
New York’s pension system also urged Ford and General Motors (NYSE:) to move quickly toward electrification and reveal more about pressure on vehicle standards.
Toyota said its approach to offering a range of alternatives to gasoline-powered cars — including hybrids, plug-in hybrids, hydrogen and electric cars — is better overall for reducing carbon emissions and more practical than switching to electric vehicles alone.
In April, the automaker sold 8,584 electric vehicles worldwide, including its Lexus brand, accounting for more than 1% of its global sales in a month for the first time. It aims to sell 1.5 million electric vehicles annually by 2026.