In a move viewed a monumental management change, Toyota Motor Corporation (ADR) (NYSE:TM) announced a reorganization that will include outside board of directors.
This will be a first for the 76-year-old company and its biggest overhaul since 2009 when it turned over the presidential reins to Akio Toyoda, the grandson of the company's founder. With the change, growth and streamlining the decision-making process is expected, reported The Wall Street Journal.
Toyoda noted the company's core values of high quality and customer services will not be compromised as it grows, which had previously been questioned under Toyoda's leadership during the recent recall.
Speaking at a Tokyo news conference on Wednesday, Toyoda said, "The objective of the changes being announced today is to build an organization where people can take ownership of their work as we enter a new phase of growth in vehicle sales."
Change will include saying goodbye as three executive vice presidents and Toyota Motor Corporation (ADR) (NYSE:TM)'s current chairman will retire. This includes Shinichi Sasaki, who oversaw quality control; he was vital in the 2009 recall.
Additional retirements are Atsushi Niimi, who managed production and Toyota's North American business and Yukitoshi Funo, who oversaw the emerging-markets business line. The three had been appointed at the time that Toyoda took over and they are all very close to him.
Filling these roles will be two deputies through promotion along with three outsiders to its board of directors. This has been done for greater transparency as requested by shareholders, according to Toyoda. He added, "As a global company, we'd like people to view us as an open company."
Mark Hogan, a former General Motors Company (NYSE:GM) executive is one of new board members. Takeshi Uchiyamada, from the inside, is the new chairman. He has been a driver of the successful Toyota Prius, the hybrid car that has been viewed as symbol of technical innovation.
Uchiyamdada will follow in Fujio Cho's footsteps, who has been named as the honorary chairman.
With the move to external directors, this bucks the usual Japan corporate system of not including outsiders to its boardrooms.
According to the Research Institute of Economy, Trade and Industry, as of March 2011 only 47% of companies listed on the "first section" of the Tokyo Stock Exchange (TSE) included outside directors. From that figure, the majority only had one. External directors comprised approximately 10% of board members on TSE's top-tier companies.
This is a quite a departure from U.S. companies with their 70% number, the 50% figure over in the U.K. and the 30%-plus in South Korea, noted the institute.
From Toyota Motor Corporation (ADR) (NYSE:TM)'s new board, its three outside directors of its 16 total will represent 19%.
Along with Hogan, the company said it will nominate a Japanese life insurance executive to its board and the head of a clearing and securities settlements company. These changes will take place after a vote at Toyota's annual June general shareholders' meeting.
Toyota Motor Corporation (ADR) (NYSE:TM)'s stock is up 1.06 percent, trading at $104.38.