Toshiba director warns of further instability in company

Toshiba’s shareholders have extended “instability and uncertainty” to the conglomerate in difficulty with his shock vote to remove the chairman of the company’s board, said a director who saw no choice but to resign after last Friday’s investor revolt.

In exclusive remarks made to the Financial Times following his sudden resignation on Friday, George Olcott expressed strong regret over the vote to remove Osamu Nagayama – a man he has described as one of the few Japanese business executives capable of overseeing a change in scale now needed by Toshiba.

“Taking him as chair serves only to prolong instability and uncertainty in addition to depriving him of the advice of an exceptional leader. I cannot understand how this development represents a good outcome for society or for any of its stakeholders,” he said. said Olcott, a former investment banker at SG Warburg who sits on the boards of several Japanese companies.

His statements followed Toshiba’s annual general meeting (AGM) last Friday – held after months of deep turmoil for the company and a period of unprecedented victories for activist shareholders operating in Japan.

The removal of Nagayama by shareholders at the AGM followed the call of some investors for all advice to be removed as a result of repeated leadership failures in a society that many see as rich with valuable technology and growth potential.

“I think Mr. Nagayama’s plan to chart a new course for Toshiba to improve its business value was ambitious but achievable and I look forward to helping him and advising him on this effort,” Olcott said.

But others have firmly rejected Olcott’s warning of instability at Toshiba, claiming instead that, despite the trial’s mischief, the past two weeks had dispelled the main flashbacks of shareholder distrust in Toshiba’s direction.

Raymond Zage, non-executive director of Toshiba, said that immediately after last Friday’s AGA he had put the council in a state of unity and clarity on issues that need attention.

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

Nagayama’s removal on Friday forced the company’s interim CEO, Satoshi Tsunakawa, to intervene as interim board chairman until Toshiba could convene an extraordinary general meeting to appoint a new leadership team that includes at least four new ones. members of the non-executive board.

The AGM followed the release this month of one explosive independent report in the events surrounding Toshiba’s 2020 annual meeting. The report presupposed a collaboration between the company and the Japanese government to suppress the active shareholders.

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

While Nagayama took over his role as chairman of the board and head of the nomination committee after the AGA 2020, they argued that he should be held accountable for managing Toshiba’s own investigation, which concluded that there were no problems.

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