Toshiba chief resigns, warning of greater instability in the company

Toshiba shareholders have prolonged “instability and uncertainty” in the troubled conglomerate with their shock vote to remove the chairman of the company’s board of directors, said a director who had no choice but to resign following last Friday’s investor uprising.

In exclusive remarks to the Financial Times following his sudden resignation on Friday, George Olcott expressed serious concerns over the ouster vote Osamu Nagayama – a man he described as one of the few Japanese business leaders capable of overseeing a turnaround on the scale now required by Toshiba.

“Removing him from his role as chairman only serves to prolong instability and uncertainty and deprives the board of directors of an exceptional leader. I cannot understand how this development represents a good result for the company or any of its stakeholders, ”said Olcott, a former investment banker at SG Warburg who sits on the boards of several companies. Japanese.

His remarks follow Toshiba’s annual general meeting (AGM) last Friday – held after months of escalating unrest for the company and a period of unprecedented victories for activist shareholders operating in Japan.

Nagayama’s impeachment by shareholders at the AGM followed calls by some investors for the dismissal of the entire board of directors over repeated failures in the management of a company that many see as wealthy. valuable technology and growth potential.

“I think Mr. Nagayama’s plan to chart a new course for Toshiba to improve its corporate value was ambitious, but achievable and I was eager to help him and the board in this endeavor. Said Olcott.

But others have firmly dismissed Olcott’s warning about instability at Toshiba, saying instead that, despite the mess of the process, the past two weeks have removed the main lightning rods of shareholder mistrust of leadership. from Toshiba.

Raymond Zage, a non-executive director of Toshiba, said the day after last Friday’s AGM put the board in a state of unity and clarity on issues needing attention.

“The root cause of the instability at Toshiba is the result of a loss of confidence from our shareholders, and the independent investigation has confirmed that this loss of confidence is justified. We are fully focused on the need to restore that trust as well as the importance of providing stability and certainty to our employees and customers, ”Zage told the FT.

Nagayama’s impeachment on Friday forces the company’s interim CEO Satoshi Tsunakawa to serve as interim chairman of the board until Toshiba can call an extraordinary general meeting to appoint a new management team that includes at least four new non-executive board members.

The AGM followed this month’s publication of a explosive independent report in the events surrounding the 2020 Toshiba Annual Meeting. The report alleged collusion between the company and the Japanese government to suppress activist shareholders.

In the days leading up to last Friday’s AGM, a growing number of large institutional shareholders told the FT that they could not justify voting for Nagayama’s reappointment.

As Nagayama took over as chairman of the board and head of the nominating committee after the 2020 AGM, they argued that he should be held accountable for handling Toshiba’s own investigation, which concluded that there was no problem.

But other figures have also jumped into the debate in his defense, including John Roos, Barack Obama’s former ambassador to Tokyo, who issued a statement ahead of the AGM praising Nagayama as “an agent of positive change, not a protector of the status quo “. ”

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