Toshiba to flag that activist board nominees not approved unanimously: sources

TOSHIBA Corp plans to notify shareholders that two board director nominees from activist hedge funds were not approved unanimously by its nomination committee, people familiar with the matter said on Friday. While divided votes on director nominations are not particularly rare, taking the step to formally disclose the matter is unusual, highlighting how contentious the issue has been for Toshiba’s board. The embattled conglomerate plans to include a note on the divided vote in a booklet for its June 28 annual shareholders’ meeting, the two sources said, declining to be identified because the matter was private. According to one of the sources, one member of the five-member nomination committee had opposed the nominations of Nabeel Bhanji, a senior portfolio manager at Elliott Management, and Eijiro Imai, managing director at Farallon Capital Management. The member, who had argued the nominees’ backgrounds could distort the balance of the board, also insisted that the fact that the vote was divided be publicised, the source said. Caught up in accounting and governance crises since 2015, Toshiba has long been at loggerheads with its activist shareholder base.

Some of those shareholders including Farallon have called for the conglomerate to be taken private – arguing it is the best route to maximising shareholder value and resolving its governance issues. The board director nominations are among signs that Toshiba, which has been exploring its strategic options after shareholders voted down a restructuring plan, has become more receptive to the idea of a take-private deal. Toshiba said on Thursday it has received eight initial proposals to take it private as well as two proposals for capital alliances that would see it remain listed. Bringing activist shareholders onto a board is relatively rare in Japan, though there have been a few cases including Olympus Corp’s 2019 decision to invite a ValueAct Capital partner onto its board. In addition to the nominations of Bhanji and Imai, Toshiba has also nominated Akihiro Watanabe, an executive from boutique US investment bank Houlihan Lokey, as chairman of its board. Toshiba’s board currently has eight members but the company plans to increase that to 13. REUTERS