External directors at Toshiba Corp exchanged criticism on Monday over statements on board decisions, signalling a public rift as the embattled conglomerate reviews strategic options including going private.
In an annual business report released on Monday, Toshiba external directors Mariko Watahiki and Katsunori Hashimoto, both members of Toshiba‘s three-member audit committee, were quoted as saying that external director Raymond Zage raised concern about Toshiba‘s governance by breaking ranks with the board’s official stance after a March meeting.
Zage defended his actions in a statement to Reuters, saying the criticisms were misleading and that his actions had received a positive shareholder response.
Company documents also confirmed that Watahiki had objected to two nominations supported by the board. Reuters reported on Friday, citing people familiar with the matter, that Watahiki had objected and that the company, in a rare move, would make her objections public.
In March, Zage came out in public support of a proposal from Singapore-based 3D Investment Partners that the company solicit buyout offers from private equity firms. It had been rejected by the board but was later taken up, and voted down, at an extraordinary shareholders’ meeting.
“(Zage’s comments) damaged shareholder confidence in the board and caused concerns about corporate governance,” Watahiki and Hashimoto were quoted as saying. “Even if the above act cannot be said to constitute a breach of the duty of care.”
Zage said in the statement to Reuters: “(It is) inaccurate, incomplete and misleading representing a failure on the part of the authors to consider the substantial positive shareholder feedback as well as the content of substantial discussions at the board on this matter both before and after the public statement.”
Toshiba declined to comment on the matter.
Zage also chairs the nomination committee, which proposed the two board candidates – from U.S. activist hedge funds Elliott Management and Farallon Capital Management – formally opposed by Watahiki.
Caught up in accounting and governance crises since 2015, Toshiba has had tussles with its activist shareholder base, some of whom want it taken private.
Toshiba said last week that it had received eight initial proposals to take it private and two proposals for capital alliances that would leave it publicly listed.