Japan's firms turn to celebrities to boost ranks of female executives

Japanese companies are tapping female celebrities to add fresh faces to their corporate lineup as the administration of Prime Minister Fumio Kishida and investors alike push for diversity in boardrooms.

Last month — during peak season for annual shareholders meetings in Japan — the shareholders of major automaker Suzuki Motor approved the appointment of Naoko Takahashi, gold medalist of the 2000 Sydney Olympic women's marathon, as an outside director. Meanwhile, Minako Nakano, a former anchorperson at Fuji TV, became an outside director at Yondenko, a Kagawa-based power infrastructure construction firm.

Another former Fuji TV anchorperson, Kyoko Uchida, joined the board of Kids Smile Holdings, becoming an outside director of the Tokyo-based day care center operator.

An outside director is a member of a company's board of directors who is not an employee or a stakeholder in the company and is tasked with keeping an eye on management. Traditionally, board members of many Japanese firms have been insiders, but more companies have been appointing outside directors in the past decade or so, since the government has been focused on strengthening corporate governance.

On top of the pressure to get more outside directors, the Kishida administration is now pushing for more female executives, as it compiled an economic policy guideline on women in June that includes having at least one female exec per company by 2025 and boosting the ratio of female executives to at least 30% by 2030 for Japanese firms listed in the top Prime section of the Tokyo Stock Exchange.

In that sense, appointing female outside directors means that companies can increase the number of both women and outside directors at once.

According to data put together by the OECD on the male-to-female ratio on boards at major firms, Japan was lowest among the Group of Seven countries, with 15.5% in 2022. In contrast, France had 45.2% and the United States had 31.3%.

Investors consider the lack of gender diversity in the C-suite to be a serious issue. In this year’s guideline for Japanese stocks, Goldman Sachs Asset Management said it will vote against companies’ board nominations if women do not occupy at least 10% of seats.

“It is going to be quite tough to meet the 30% target. Many companies are struggling to find even one female executive,” said Yutaka Suzuki, a chief researcher at the Daiwa Institute of Research.

Part of that difficulty comes from the lack of women in Japan with the business experience companies are looking for.

That's why more companies are apparently looking outside the business sphere and reaching out to female celebrities, as they are well-known among the public and have the potential to raise awareness of the companies' names, Suzuki said.

While some may think that celebrity directors are unsuitable since they often don’t have experience in running companies, experts say they still have something to bring to the table.

“I think it’s unreasonable to assume that those celebrities are not qualified (for the outside director positions) just because they are celebrities,” said Suzuki.

Suzuki pointed out that there are cases where even business people who are appointed as independent outside directors are actually friends or acquaintances of the companies’ leaders.

In that case, those outside directors can’t be objective on the companies’ management.

Compared to such cases, celebrities, who care about their reputation, are aware that if they don’t do a decent job, they could be a target of criticism.

So “it’s possible that they are actually better choices,” Suzuki said.

The automaker Suzuki Motor explained that it decided to appoint gold medalist Takahashi because she has been involved with various projects to help developing countries and has also visited those areas herself.

The company said that such activities are in line with its business approach, adding that it is crucial for the automaker to provide products and services by learning about the needs of local people. Suzuki Motor has a strong presence in some overseas markets, such as India.

Although Takahashi has no business experience other than being an outside director at another firm since last year, “we judged that she will provide us with useful suggestions, advice and supervision for achieving sustainable growth and improving our corporate value, based on her past experience and her philosophy,” the automaker said in its notice of convocation for the shareholders’ meeting.

Hiroko Ota, who was minister in charge of economic and fiscal policy under the administration of former prime ministers Shinzo Abe and Yasuo Fukuda between 2006 to 2008, also said the role of outside directors does not necessarily require business experience.

“I, myself, had no business experience, so I had declined an offer at first,” Ota, who is now president of National Graduate Institute for Policy Studies, said in a TV Tokyo program last month.

Ota eventually joined the board of some major firms, such as Panasonic and Mizuho Financial Group, as an outside director.

Once Ota started assuming the role, she found that what’s important is to bring outside perspectives.

“Companies need pressure from those outside who would ask questions or point out things that they are not expecting,” she said.