The Toshiba disaster movie may have finally found its hero

For some time now, the serpentine saga of Toshiba has been a disaster movie without a hero, a director or the prospect of a decent final act. Just expensive special effects, gratuitous plot twists and a cast of expendable supporting actors.

But quite suddenly, either by exhaustion or accident, all that may be about to change. At least, it may be about to get its hero. And, to the extent that the Toshiba story has always been a much wider parable of Japan, this may also emerge as the moral of the show.

Few aspects of the Toshiba tale have painted an encouraging picture either of the decline of a corporation that once commanded international awe, the interventionist instincts of the Japanese government or of what happens when a financial crisis thrusts a national icon into a rolling, unwinnable conflict with activist shareholders.

Accordingly, Thursday’s extraordinary general meeting had a long and mostly depressing build-up. The short version is that it produced a climactic moment where the direction of Japan’s most famous industrial conglomerate came down to two pivotal (though non-binding) questions for shareholders.

They could vote on management’s hastily conceived and not terribly well articulated plan to split the company in two, and on a major shareholder’s palpably self-interested counterproposal that the company explore taking itself private. The recommendations of shareholder advisory groups ISS and Glass Lewis were pleasingly colourful with the latter describing Toshiba’s two-way split plan as based on “flagrantly dubious reasoning”. 

In the event, shareholders voted against both options. While this did not, in fact, rule out any number of possible outcomes — Toshiba shares rose on Friday following reports that talks with private equity had already begun — the double rejection created a strong appearance of an impasse. This was the natural result, on that reading, of a crisis that has divided investors, senior management and the board of Toshiba. Long, deadlocked months must surely stretch ahead.

But another interpretation is that this double rejection actually creates a mandate for a new leader to come up with a different plan to lead Toshiba decisively out of this mess. So long, of course, as the just-installed chief executive, Taro Shimada, is given the leeway to treat it as such. For those that have long argued that corporate Japan is in desperate need of a more professional CEO class, Toshiba’s shareholders have now set the company up as the ultimate proving ground for that theory.

And while that heaps astonishing pressure on the man, Shimada is very much what a professional, company-hopping Japanese CEO should look like. A robotics whizz who joined Toshiba in 2018 having run Siemens Japan and who has worked to great success in the fields of heavy industry, hardware development and digitisation, he was made CEO this month after his predecessor resigned unexpectedly. He is, by the accounts of Toshiba executives, someone who very quickly commanded the respect of the engineering base of the company — a critically important cohort whose morale and motivation will be key to any turnround, even if it involves selling off big chunks of the empire.

His connection with this group is important and unusual. Toshiba has tried letting a succession of internal patricians run the show, and it has tried putting a banker in charge. None of those were remotely the Moses figure that this company requires at either the grassroots or boardroom level, and the endless rounds of shareholder clashes make that quite clear. Shimada, meanwhile, now has an opportunity to show that a professional CEO can, if given the chance, present both the company and its investors with the best options.