Toyota Motor | 2016

On June 15th, 2016, Etica Sgr voted at Toyota Motor’s annual shareholders’ meeting for the third year in a row. Japan’s biggest motor vehicle company, Toyota manufactures and sells cars all over the world.

The meeting was convened to approve the election of the Board of Directors. Specifically, 11 members were proposed for re-election, 7 of whom as outside directors. Etica Sgr voted in favor of the election of 9 members, as there were no critical issues with their nomination, nor was there any reason to object to their respective professional profiles; on the other hand, Etica Sgr abstained from voting on 2 outside directors, namely Mr. Uno Ikuo and Mr. Mark T. Hogan. While Toyota presented these 2 nominees as independent directors, both have held important positions in companies related to Toyota Motor over the course of their career, such that their actual, effective independence would be compromised.

Etica Sgr saw no critical issues with the proposal to elect the outgoing auditor, Mr. Sakai Ryuji, as “Outside Audit & Supervisory Board Member” (in accordance with Japanese law), and thus voted in favor of this resolution.

As for the last agenda item, which concerned the payment of annual bonuses to members of the Board of Directors, Etica Sgr was pleased that Toyota Motor had chosen to submit Board Member bonuses for shareholder approval even though Japanese law does not require it to do so. Nevertheless, Etica Sgr voted against this resolution, not only because it went against paragraph 1.6 of its Guidelines on Active Shareholder Engagement, but also for the following reasons: a lack of underlying performance indicators that could justify the significant increase in bonuses compared to those paid out in 2015; and a lack of social and environmental KPIs.

In keeping with its voting rationale, Etica Sgr has made an effort to start a dialogue with Toyota Motor on the issues of independence and the presence of women on the Board of Directors. Additional engagement issues that will be brought up with Toyota Motor include product innovation (car batteries, Internet of Things), carbon dioxide emissions, supply chain management (especially as concerns conflict minerals), product safety, and issues related to fiscal transparency.