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Olympus ax fails to win hearts
Source: Agencies |
October 27, 2011, Thursday
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OLYMPUS Chairman and President Tsuyoshi Kikukawa stepped down yesterday in response to a widening scandal over dubious acquisition deals, as sources said Japan's securities watchdog was looking into the 92-year-old firm's dealings.
Olympus fired its UK president and chief executive Michael Woodford two weeks ago, claiming he failed to understand the company's management style. Chairman Kikukawa took over his role.
Woodford, who joined the company in 1980, said he was sacked for questioning a huge advisory fee paid in a 2008 takeover, plus other deals.
Woodford said yesterday that Kikukawa's resignation was "a start" but added that Shuichi Takayama, a senior executive managing officer appointed to replace Kikukawa, had also failed to demand explanations about hefty fees linked to acquisitions.
Takayama chided Woodford in a news conference, however, saying the company was angry the former chief executive had revealed internal information.
Kikukawa said he had stepped down to restore confidence in the company.
The Olympus scandal could reignite debate on what critics say is a deep-seated weakness in Japanese management - a lack of independent oversight of boards that risks inefficient use of capital and gives short shrift to shareholders' rights.
Japanese business monthly newspaper Facta first raised red flags about Olympus's mnerger and acquisition deals in August, and the country's Securities and Exchange Surveillance Commission then started paying particular attention to the company, according to sources.
Shares in Olympus fell 7.6 percent yesterday and have lost more than half their value since Woodford was sacked.
Investors' initial reaction to the announcement was tinged with skepticism.
"The stock should rebound on his resignation, but in reality nothing has been cleared up. There are still many investigations to come," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"Nothing changes with this," said another analyst. "It does not clarify anything about the lack of details, nor anything about the responsibility of the person said to be at the heart of (the scandal)."
Woodford said he was fired for questioning a US$687 million payment to advisers in the US$2.2 billion takeover of medical equipment maker Gyrus in 2008. At 30 percent of the acquisition price, that set a record in M&A fees.
Olympus fired its UK president and chief executive Michael Woodford two weeks ago, claiming he failed to understand the company's management style. Chairman Kikukawa took over his role.
Woodford, who joined the company in 1980, said he was sacked for questioning a huge advisory fee paid in a 2008 takeover, plus other deals.
Woodford said yesterday that Kikukawa's resignation was "a start" but added that Shuichi Takayama, a senior executive managing officer appointed to replace Kikukawa, had also failed to demand explanations about hefty fees linked to acquisitions.
Takayama chided Woodford in a news conference, however, saying the company was angry the former chief executive had revealed internal information.
Kikukawa said he had stepped down to restore confidence in the company.
The Olympus scandal could reignite debate on what critics say is a deep-seated weakness in Japanese management - a lack of independent oversight of boards that risks inefficient use of capital and gives short shrift to shareholders' rights.
Japanese business monthly newspaper Facta first raised red flags about Olympus's mnerger and acquisition deals in August, and the country's Securities and Exchange Surveillance Commission then started paying particular attention to the company, according to sources.
Shares in Olympus fell 7.6 percent yesterday and have lost more than half their value since Woodford was sacked.
Investors' initial reaction to the announcement was tinged with skepticism.
"The stock should rebound on his resignation, but in reality nothing has been cleared up. There are still many investigations to come," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
"Nothing changes with this," said another analyst. "It does not clarify anything about the lack of details, nor anything about the responsibility of the person said to be at the heart of (the scandal)."
Woodford said he was fired for questioning a US$687 million payment to advisers in the US$2.2 billion takeover of medical equipment maker Gyrus in 2008. At 30 percent of the acquisition price, that set a record in M&A fees.
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