Toyota Motor Corp. has won approval to sell a new class of stock to long-term shareholders, a proposal that divided proxy advisers and drew criticism from foreign investors.
The proposal passed on Tuesday with about 75 percent of shareholders voting in favor, Kayo Doi, a company spokeswoman, said after the carmaker’s annual meeting at its headquarters in Toyota, Aichi Prefecture, the same day. Model AA shares, named after Toyota’s first car, will be restricted from trading for five years. In exchange, the company pays a fixed dividend and will offer to buy back at the issue price. […]
Toyota’s proposal followed a study backed by Japan’s government last year that recommended creating an environment for growing longer-term household assets through investment in “sustainably growing companies.” The study also stressed the importance of attracting long-term oriented investors who “understand the company well and support it.”
Calstrs, the Canada Pension Plan Investment Board and the Florida State Board of Administration said they were voting against the proposal, as was recommended by ISS.
“Your standard shareholder doesn’t want to give up liquidity for five years,” said Nicholas Benes, representative director at the Board Director Training Institute of Japan. “Toyota has encountered enough resistance here that you’d have to think twice about trying to do something like this again.”
The stock may shield Toyota from Japan’s corporate governance code, which puts pressure on companies that own other firms’ stock in arrangements known as cross-shareholdings, said Hiroki Sampei, director of research at Fidelity Worldwide Investment in Tokyo. The company said its cross-shareholding arrangements will be unaffected by Japan’s corporate governance code, which took effect June 1.
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