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In 2015, Toyota proposed to issue a separate class of shares to attract long term individual Japanese shareholders aligned with the company’s long-term R&&D programmes. The distinguishing feature of these shares was the exit option with no loss of capital. The proposal was not received well by US based institutional shareholders of the company and proxy. A major proxy adviser recommended voting against the proposal. The case provides an opportunity to discuss security design issues and their implications for corporate governance.
Design of corporate financial securities. Corporate governance and security design