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Proxy advisers ISS, Glass Lewis back Toshiba, recommend against dissidents

Published 07/16/2020, 04:58 PM
Updated 07/17/2020, 03:35 AM
© Reuters. FILE PHOTO: Logo of Toshiba Corp is seen as Window cleaners work on the company's headquarters in Tokyo
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By Svea Herbst-Bayliss

BOSTON (Reuters) - Proxy advisers Institutional Shareholder Services Inc (ISS) and Glass, Lewis & Co on Thursday recommended that Toshiba (OTC:TOSYY) Corp shareholders elect all company directors, dealing a blow to two activist investors pushing to add five newcomers.

ISS and Glass Lewis each backed the Japanese conglomerate's 12 board members and said shareholders should vote against hedge fund Effissimo Capital Management's three proposed directors, including one of the fund's partners, and against 3D Opportunity Master Fund's two candidates.

Shareholders will vote at Toshiba's annual meeting scheduled for July 31 and many investors follow the proxy advisers' recommendations.

"The recently reconstituted board is appropriately focused on the key issues impacting Toshiba, and therefore, additional change at the board level does not appear necessary at this time," ISS said in its report.

Toshiba acknowledged its more international ownership, which includes U.S. hedge funds King Street Capital and Farallon Capital Management, when it added seven independent directors, with the input of shareholders, last year.

Toshiba said ISS's recommendation underscores that its "slate of directors has the right mix of skills, experiences and new perspectives to provide independent oversight of the continued execution of our transformational Toshiba Next Plan (TNP)."

The company faced fresh pressure from shareholders this year when 3D, which owns a 4.2% stake, said the share price was being hampered because the company is a conglomerate. Effissimo, Toshiba's biggest shareholder with a 15% stake, argued that more progress on corporate governance was needed after an accounting scandal in 2015.

Toshiba and Effissimo also tangled recently over whether large investors should be able to serve as board members. Effissimo said investors make good directors because their interest is in pushing the company to greater success. The company expressed concerns about conflicts that shareholders would have.

© Reuters. FILE PHOTO: Logo of Toshiba Corp is seen as Window cleaners work on the company's headquarters in Tokyo

ISS did not weigh in on the issue.

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