Looking to clean house after the revelation of an accounting scandal that stretches back to the 1990s, Japan's Olympus has seen its entire board resign. Six of the 11 candidates for the board to be voted on in April are outsiders. In addition, the company has nominated Hiroyuki Sasa, head of its medical equipment marketing business, as its next president, and Yasuyuki Kimoto, a former senior managing director at Olympus' main bank, Sumitomo Mitsui Banking, as chairman.
As its next president, Sasa is hoping to help to restore his company's reputation, saying Olympus would devise a business strategy before considering capital tie-ups. A restructuring plan is in the works, he added, Reuters reports.
The current management board, including President Shuichi Takayama, will step down after the extraordinary general meeting April 20. "Once the new board members announced today are approved by the shareholders meeting, I believe they will be able to rebuild the company," Takayama said, as quoted by the Agence France-Presse.
Olympus' reputation took a hit after ex-CEO Michael Woodford brought long-term accounting irregularities to light last year and was subsequently fired. The Japanese camera and medical equipment maker eventually admitted that it had hidden $1.5 billion of losses over roughly two decades. He had considered a proxy battle, but dropped his plan to put forward candidates, Bloomberg notes.
But if Olympus were looking for any support from its former chief about the executive announcements, it would be disappointed. "Looking at capital raising, to have a representative of the bank there as the chairman will only frustrate and alienate any independent foreign shareholder, and I'm sure shareholders in Japan," Woodford said. "It's completely and utterly wrong," he told Reuters by phone.
It will be interesting to see how Sasa performs, particularly since he's coming from the currently more successful part of the business. As Reuters notes, the company's medical systems unit has actually been doing quite well and is a preeminent force in the global market for diagnostic endoscopes. However, Olympus' once lofty camera business isn't as hot, and the company is forecasting a ¥32 billion (roughly $397 million) net loss in the financial year ending March 31.
However, the executive moves could prove unsatisfactory to international investors that had been pushing for external appointments. "We have said all along that you need a strong external chairman completely unaffiliated with the banks and a strong new [chief executive] to come in and have a board that is majority independent," said Josh Shores, at Southeastern Asset Management, as quoted by The Wall Street Journal.
Other analysts are also predicting little change from the old ways. "A new management drawn from internal officials and a former banker wouldn't look likely to ring significant changes at Olympus," Deutsche Bank's Yoshikazu Higurashi said before the announcement, as quoted by Bloomberg.
- see the announcement on the directors and candidate bios (.pdf)
- check out the Reuters story
- read Bloomberg's take
- get more from this Reuters report
- check out the AFP story
- read more from the WSJ