Tokyo, Japan—Following the October 14th firing of Olympus Corp.’s CEO and president, Briton Michael C. Woodford, Olympus continues to be plagued by scandal. Today it was announced that its chairman, Tsuyoshi Kikukawa, who took over as president and chief executive following Woodford’s dismissal, has himself resigned in an attempt to restore confidence in Olympus, whose shares immediately took a 17% plunge after Woodford’s ousting and have now declined by 56%. Shuichi Takayama, the head of the company’s struggling camera division, succeeds Kikukawa as president.
“In consideration of the widespread concerns to Olympus’s stakeholders, due to the recent series of media reports and fall in the stock prices triggered by the company’s change in president on October 14, 2011, Tsuyoshi Kikukawa, has as of today, stepped down from his position as company representative and also from his position as chairman, president and chief executive officer. In his place, Shuichi Takayama has been appointed as representative director and president,” the company announced in a press statement.
Woodford, 51, a 30-year Olympus veteran, was named president in April 2011, becoming one of only a few non-Japanese to run a large Japanese corporation. Just six months later, the Olympus board stated he was unanimously dismissed because his actions “largely diverted from the rest of the management team in regard to the management direction and method and it is now causing problems for decision-making by the management team.”
“We hoped that he could do things that would be difficult for a Japanese executive to do, but he was not able to understand that we needed to reflect the management style we have built up since the company was established 92 years ago, as well as Japanese culture,” Kikukawa commented at a news conference announcing Woodford’s dismissal.
Woodford said he was in fact fired for questioning a $687 million advisory fee linked to a $2.2 billion takeover in 2008 and other deals he says destroyed about $1.3 billion of shareholder value. The acquisitions are said to have wiped out more than half the company’s market value in two weeks. Woodford publicly called for the resignation of Olympus’s board and sent dossiers on its suspicious deals to Britain’s Serious Fraud Office (SFO), Japan’s Securities and Exchange Surveillance Commission (SESC) and the U.S. Federal Bureau of Investigation.
Olympus responded that Woodford “used his position to leak ‘company secrets’ by questioning $687 million paid to advisers on a takeover and that he aims ‘to ruin the credibility’ of the camera maker,” according to Bloomberg Businessweek, and it was “considering legal action” against Woodford, according to a letter posted on the firm’s internal website, a copy of which was given to Bloomberg News.
The fallout has now resulted in the resignation of the company’s chairman, Tsuyoshi Kikukawa, while its new president, Shuichi Takayama, a 41-year Olympus veteran, reiterates the company’s line that it had done nothing wrong,” reported Reuters. Sources told Reuters, “Japan’s securities watchdog was looking into past Olympus takeover deals, focusing on whether it has properly disclosed relevant information.”
Josh Shores, a principal at Olympus’s largest non-Japanese investor Southeastern Asset Management, said the boardroom reshuffle was “a step in the right direction,” Reuters reported. And Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, said the “company’s battered share price should rebound on the resignation,” adding “nothing has been cleared up. There are still many investigations left to come.”
Woodford told Reuters that Kikukawa’s resignation was “a start” but Takayama “had also failed to demand explanations” about the fees. “The only way you can stop the company heading for the rocks is by answering the questions. Why was the $687 million paid? Who was it paid to?” he said in a phone interview.
Takayama responded at a news conference, stating there was no problem with fees paid by Olympus and the company was extremely angry that Woodford revealed internal information while he was still a director. “I was one of those who agreed to Mr. Woodford’s dismissal. The reason was his autocratic actions, and these included intimidation of my own staff,” reported Reuters.
Kikukawa, who had been with Olympus for nearly 50 years, said in a separate statement he had stepped down to restore confidence in Olympus under the new management and he would continue on as a director. “I apologize for causing concerns due to the share decline triggered by the replacement of the previous president,” Kikukawa said in a statement read by an Olympus official at a press briefing in Tokyo yesterday. “There is no corruption” in past acquisitions.
The company said it would set up an independent committee to probe its acquisitions after three of its biggest shareholders asked for an explanation of the fees paid in the $2 billion takeover of Gyrus Group Plc in 2008.
Takayama told reporters yesterday in Tokyo that regaining trust is now the company’s top priority. “Our corporate value hasn’t been ruined. We believe we can restore the stock price.”
Currently, the chairman position at Olympus is vacant and a plan for choosing a replacement hasn’t been determined, according to Miho Urakami, a spokeswoman at Olympus. olympus.com