Toshiba should review management and management, Japan’s main pension fund says Reuters

By Makiko Yamazaki

TOKYO (Reuters) – Toshiba (OTC 🙂 Corp.’s proposal to split itself into three companies will not solve its governance problems and the conglomerate should prioritize the renewal of its board and management, said a senior executive at one of Japan’s largest pension funds.

Ken Hokugo, director of corporate governance for the Association of Pension Funds (PFA), said the interests of Toshiba’s management and shareholders “do not coincide”.

“The most orthodox solution to the disagreement is to bring in someone who can control and discipline management on the board, and allow the new board to elect a new CEO,” he said in a written response to questions from Reuters.

Hokugo denied that the PFA, which owns a number of shares in Toshiba, will vote on a plan to split it into three companies in the conglomerate: one for energy and infrastructure, another for electronic devices and a third to store its flash memory. chip-active.

However, his comments highlight a broad shareholder concern about Toshiba, marking a rare public statement from an influential Japanese pension fund, part of an industry that remains silent about the companies it normally invests in.

The PFA, which benefits people who have left their employee pension programs, is one of the largest pension funds in the country with 12.5 trillion yen ($ 108 trillion) in assets.

Foreign shareholders, however, have further expressed their concern, and several of them have strained relations with Toshiba’s management after a shareholder-mandated investigation last year merged with the trade ministry to reduce their impact.

Toshiba has argued that its bankruptcy plan aims to maximize shareholder value. Toshiba did not immediately respond to Hokugo’s request for comment.

Hokugo noted the successful changes in chip materials manufacturers at Olympus Corp. and JSR Corp., both of whom were invited to shareholder value by ValueAct Capital https://www.reuters.com/business/finance/japan-inc-activist-investors- come-cold -2021-04-21. “As a result of reviews reviewed by a ValueAct partner, their corporate values ​​increased,” he said.

Some Toshiba shareholders have told Reuters that they are pushing companies publicly or privately to conduct a more in-depth review that will take into account potential private equity offerings.

Toshiba did not formally request a takeover bid in a five-month strategic review before deciding on the break-up, deeming a split unexpected for management, Hokugo said.

It is also understandable that some shareholders would like to see a private equity deal, as taking private Toshiba could allow for drastic measures that are not possible for a listed company.

Hokugo also stressed that it is up to the shareholders, not the management, to decide the best way to increase the value of the company.

Toshiba plans to hold an extraordinary shareholder meeting in March https://www.reuters.com/business/toshiba-shreholder-calls-extraordinary-meeting-vote-break-up-plan-2022-01-06 to shareholder support. a breakdown plan, but the exact date and date of the shareholder approval bar are yet to be decided.

Over the years, accounting scandals and government problems have halved Toshiba’s market value by more than $ 18 billion since its peak in the early 2000s.

($ 1 = $ 115,4500)