Japan's Olympus ($OCPNY), well-known for its endoscopes and cameras, has been having a tough year. A long-term, $1.7 billion accounting scandal has taken its toll on the company's reputation. But the company has been looking to the future with a new president and chairman, along with a fresh slew of directors.
Not so fast, says global shareholder ISS Proxy Advisory Services, which is now urging investors to vote against the two men tapped by Olympus to lead it forward. ISS is standing against potential President Hiroyuki Sasa because he's not experienced enough to lead the company at this time. "Sasa's work experience does not appear appropriate" to take the helm of the company "at a time when the firm is faced with enormous tasks ranging from restructuring and financial stabilization to restoration of investor trust," ISS said in an April 6 report, as quoted by Bloomberg.
Meanwhile, Yasuyuki Kimoto shouldn't take over as chairman, because he's too cozy with a big Olympus creditor, Sumitomo Mitsui Banking Corp., according to ISS. In fact, Kimoto could put the bank's interests ahead of those of ordinary shareholders, the group says, according to Reuters.
In addition to a no vote on the leadership nominees, ISS is also urging shareholders to reject the company's newly restated accounts, as they could hurt future prospective lawsuits. "There is no telling what may happen to Olympus, depending upon the outcome of investigations by public entities now under way," the group says, as quoted by the London Evening Standard. "Given the unusual circumstances surrounding Olympus, it would not be advisable for shareholders to support this proposal, which could interfere with their ability to file suit should the financial statements turn out to be inaccurate based on information yet to be revealed."
The group's recommendations come before an April 20 extraordinary shareholder meeting. But, as Reuters notes, it might be hard to convince Japanese institutional investors, who tend to shy away from public battles (for example, they didn't back former CEO Michael Woodford last year when he brought the accounting scandal to light). However, big international shareholders might still be fuming, as they had called for outside talent to helm the company. Regardless, we will have to wait until late next week to find out what happens.