The 50.59% re-election and board diversity (2023)

Not the results, but the make-up of the board

What this episode illuminates is the arrival of an age in which the mandate to manage is measured on a coordinate separate from results or the size of one’s capital. What Mitarai held was not capital as a large shareholder. His personal shareholding was only about 0.01 percent; what sustained a quarter-century of command was not stock but the continuity of personnel and of the board. Against that continuity, the external yardstick of board diversity thrust a question of confidence for the first time. The figure of 50.59 percent was not the result of shareholders raising the flag of revolt over deteriorating results. It records the fact that, on the single point of the board’s make-up, the effective supreme power-holder was pushed to the very brink of resignation.

At the same time, this case reflects the lightness of diversity as a yardstick. The answer Canon prepared the following year was to add a single female outside director. That alone returned the approval rate to the 90-percent range, and the advisory firms’ recommendation turned from against to for. While the speed of the correction demonstrates the effectiveness of external discipline, the lightness with which confidence returns on the addition of just one woman leaves the question of whether diversity is a reform that changes the substance of management or a form for winning back votes. A company long led by an effective founding family that holds almost no stock bowed, for the first time, to discipline from outside. Its substance is for the board to come to take on.