Toshiba Overhauls Board Following Accounting Irregularities
Thursday, August 27, 2015
by: Rosemary Lally
Section: CII Governance Alert
In the wake of a $1.2 billion accounting scandal, Toshiba just announced that it is revamping its board to include a majority of outside directors.
The newly constituted 11-member board would include seven outsiders, a remarkable proportion for a Japanese company. Before this overhaul, 12 of 16 Toshiba directors were company executives. In addition, the nomination, compensation and audit committees all would be chaired by outside directors. The nomination committee names the president and other executives, while the compensation committee decides on payments for them.
Following a report by an independent panel that said the company overstated its operating profit over seven years, Toshiba CEO Hisao Tanaka resigned. Masahi Muromachi, a long-time company employee who has been serving as board chair, will stay on as CEO, but relinquish his chairmanship.
Toshiba will seek approval of the director candidates at an extraordinary shareholders’ meeting in late September.