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Sudden Resignation Of Toshiba CEO Amid Internal Opposition To Reviewed Restructuring Plans


01/03/2022


Sudden Resignation Of Toshiba CEO Amid Internal Opposition To Reviewed Restructuring Plans
In a sudden turn of events, the CEO of Toshiba Corp, Satoshi Tsunakawa, resigned, the Japanese conglomerate said. This sudden move comes after reports of a revised restructuring plan of the company surfaced that reportedly faced opposition from within the company as well as anger from shareholders which has been in the offing for long.
 
However, according to a statement from the new interim CEO Taro Shimada, the current strategy of breaking up the company which had been approved by the board would be followed by the firm.  
 
Foreign hedge fund shareholders, many of whom favour a sale to a private equity company, have slammed the scandal-plagued conglomerate's first plans to split into three announced last year. According to two individuals familiar with the situation, a revised proposal last month that called for the company to be split into two firms and the sale of other assets sparked internal disagreement.
 
According to the sources, who were not authorised to speak to the media and declined to be identified, there were concerns within Toshiba that its planned sale of assets such as its elevator business would leave the corporation with just low-margin industries.
 
When asked about internal dissent, Toshiba stated that it is certain that the restructuring plan it has revealed is the best choice for the company, but declined to elaborate.
 
According to some analysts, Tsunakawa's resignation, as well as that of Mamoru Hatazawa, a board member who advocated for the company's breakup, raises worries about Toshiba's ability to carry out its goals.
 
"The split plan will be reviewed - we think there is a chance it is scrapped," said Justin Tang, head of Asian research at investment advisor United First Partners in Singapore.
 
Shimada's hiring, as a former Siemens AG executive who only arrived in 2018, signifies a dramatic shift in Toshiba's leadership, helping the company's stock conclude the day 2 per cent higher.
 
Toshiba also announced that Goro Yanase, the leader of Toshiba's elevator business, will serve as interim CEO.
 
The board will keep an eye on the new appointees' performance as well as the status of business execution, and "where appropriate, the board will continue its considerations toward selecting external candidates," according to a statement.
 
While Tsunakawa had returned to the CEO post on an interim basis and stated that he did not want to stay in the position long-term, the timing of the announcement was unexpected.
 
The new nominations were made at this time, according to Raymond Zage, chairman of Toshiba's nominating committee, after certain shareholders expressed worries that management had not been able to move through with the company's restructuring plans in a timely manner.
 
On March 24, an extraordinary general meeting will be held to seek first shareholder approval for the amended separation plan. Shareholders will also vote on a request from a prominent shareholder that Toshiba look into alternative possibilities and seek acquisition proposals from private equity groups.
 
Following years of accounting scandals and governance concerns that eroded investor trust and saw Toshiba's market value more than drop, to approximately $18 billion, from an early 2000s peak, the original break-up proposal was unveiled last November after a five-month strategic assessment.
 
(Source:www.reuters.com)