A U.S. advisory firm for institutional investors is calling on shareholders of struggling Toshiba Corp. to oppose President Masashi Muromachi and two other board members from being reappointed as directors.
International Shareholder Services Inc.'s action could impact the votes of foreign investors at a Toshiba shareholders' meeting scheduled for Sept. 30.
The major supplier of infrastructure systems and electronics reported last week that it suffered ¥12.27 billion in group net loss in the first quarter through June after postponing an earnings disclosure for weeks due to accounting irregularities.
ISS has taken issue with Muromachi, 65, Fumiaki Ushio, a 57-year-old corporate senior vice president, and Hiroyuki Itami, a 70-year-old outside director, noting that their board tenure overlaps with the period when the irregularities took place.
In its vote recommendation, ISS said Toshiba's call for the need to maintain continuity does not sound convincing when "a thorough change in the corporate culture is urgently needed."
"The overall nomination process raises suspicion that the decision was reached for reasons other than the best interests of shareholders," the advisory company added.
Toshiba has come up with executive nominations subject to approval at a meeting of the board after the shareholders meeting, including reappointment of Muromachi as president and promotion of Ushio to corporate executive vice president.