Olympus risks foreign backlash with new board line-up
By Tim Kelly and Chris Gallagher
TOKYO (Reuters) - Japan's Olympus Corp proposed a new board of directors on Monday in an effort to recover from a $1.7 billion accounting fraud, but the line-up could face a hostile reception from foreign investors when it goes to a shareholder vote.
The maker of cameras and medical equipment said it had nominated an insider, executive officer Hiroyuki Sasa, to become president and former banker Yasuyuki Kimoto as chairman, subject to approval at its April 20 shareholders' meeting.
Kimoto was formerly an executive of Sumitomo Mitsui Banking Corp, Olympus's main lender and a unit of Sumitomo Mitsui Financial Group Inc (SMFG). He is now president of Japan Research Institute, an SMFG think-tank.
That falls short of major foreign shareholders' demands for fresh, outside talent in these two key positions and could also stoke fears among some investors that Olympus' creditors will use the chairman's role to call the shots in the boardroom.
"We are extremely disappointed with the composition of the proposed board," Josh Shores, senior analyst and principal at Southeastern Asset Management, one of the largest foreign investors in Olympus, said.
"While suggestions that the board be entirely new individuals, with a split chairman and CEO role have been taken into account, the clear creditor orientation of the board is unacceptable," he said in a statement.
Olympus also nominated as a board member Hideaki Fujizuka, a former executive of Bank of Tokyo-Mitsubishi UFJ, which is another Olympus creditor and a unit of Mitsubishi UFJ Financial Group Inc.
Current Olympus President Shuichi Takayama told a news conference that shareholders, including foreign investors, had not proposed alternative board candidates. Continued...