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Impressed by the proxy advisors' choice, Toshiba board candidates supported by activists supported the marketing campaign

© Reuters. FILE PHOTO: The Toshiba Corp logo is seen as a window cleaner at the company's headquarters in Tokyo

By Makiko Yamazaki and Noriyuki Hirata

TOKYO (Reuters) – Nominees for the Toshiba (OTC 🙂 Corp (T 🙂 board, supported by the Effissimo Capital Management activist fund, are planning to speak to investors to convince them that additional directors will help the industrial conglomerate To fix compliance issues.

The move came after Institutional Shareholder Services Inc (ISS) and Glass, Lewis & Co decided last week not to join Effissimo, Toshiba's largest shareholder, with the proposal to add three directors, arguing that the current management team is relatively new and be diverse.

Nominees Tadaaki Sugiyama, a former managing director of Kao Corp (T :), and Akira Takeuchi, a lawyer, called the proxy advisors' decision a surprise and told Reuters they wanted to bring a more convincing case and more in-depth discussions with the shareholders of Lead Toshiba.

They also plan to discuss their case again with the proxy advisors.

"In our opinion, if we can better communicate with investors and fill in the gaps where our message has not yet been conveyed, it is entirely possible that shareholders will vote against the recommendations of the ISS," said Sugiyama in an interview.

Effissimo, a Singapore-based fund with a 15% stake, cites fictitious transactions Toshiba published this year as proof that its corporate governance has made no significant progress since a major accounting scandal in 2015.

Toshiba opposed the move and argued that 12 board members are sufficient and that one candidate, an Effissimo co-founder, is inappropriate, citing conflicts of interest.

While the accounting scandal was still affecting Toshiba, it went into a crisis due to the failure of its U.S. nuclear power plant in 2017 and prompted the company to sell $ 5.6 billion in shares to dozens of foreign hedge funds .

Foreign shareholders now hold 63% of Toshiba's voting rights, while Effissimo and other activist funds hold around 30%. Toshiba added seven independent directors last year at the insistence of King Street Capital, a US hedge fund.

The annual Toshiba meeting is scheduled for July 31.

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