Olympus Ousts First Foreign-Born Chief After Seven Months; Shares Plunge
Stock Chart for Olympus Corp (7733)
Olympus Corp. (7733) ousted its first non- Japanese president after less than seven months in the job, sending shares of the camera and medical-equipment maker plunging the most in 37 years.
The board voted to replace Michael C. Woodford, 51, following disagreements about his management methods, the Tokyo- based company said in a statement today. Chairman Tsuyoshi Kikukawa will take over the president’s role.
Woodford, a Briton who described himself as “loud- mouthed” and “direct” in an interview last month, took over after profit slumped 85 percent last fiscal year and sought to cut costs. Woodford, one of a handful of foreign corporate leaders in a country that prizes consensus, bypassed unit managers to give orders directly to employees and “wouldn’t listen,” Kikukawa said.
“This isn’t just about cultural differences,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co., which oversees about $600 million in Tokyo. Woodward’s ouster stemmed from a “feud between the president and the chairman,” Akino said.
A call to Olympus seeking to speak with Woodford was connected to the company’s public relations office. Woodford wasn’t available for an interview, said Seisho Tanaka, a Tokyo- based spokesman. He declined to comment on Woodford’s whereabouts.
The stock plunged 18 percent to close at 2,045 yen in Tokyo -- the biggest drop since 1974, according to data compiled by Bloomberg. Almost 36 million shares changed hands, 16 times more than the six-month daily average of 2.2 million.
“There was a high expectation among overseas investors when Woodford was appointed that he would reform the company,” Yukihiro Goto, a Tokyo-based analyst at Macquarie Group Ltd., said by phone today. “He had announced clear financial targets such as cost reduction, and it’s uncertain whether those targets will still be pursued.”
Woodford was ousted “unanimously” at a 9 a.m. board meeting with 13 attendants, including Woodford, who wasn’t allowed to vote because the matter involved his own interests, Kikukawa said.
“Michael C. Woodford has largely diverted from the rest of the management team in regard to the management direction and method,” the company said in the statement. “It’s now causing problems for decision making by the management team.”
Woodford said previously that his management style may be at odds with the Japanese culture.
“I can be very opinionated, loud-mouthed, strong-headed and direct,” Woodford said in an interview published in the September edition of the Magazine of the British Chamber of Commerce in Japan. “These attributes perhaps are excused, because ‘that’s what gaijin are like.’”
Gaijin is a Japanese word for foreigner.
“The president was a reformer,” Akino said. “There are always possibilities that a reformer causes frictions within an organization.”
Woodford gave job instructions directly to employees, skipping unit leaders, Kikukawa said at a press conference in Tokyo.
“I gave him warnings repeatedly but he wouldn’t listen,” Kikukawa, 70, said. “Maybe he was focusing on speed but I don’t know.”
‘Differences’ in Style
Profit at the company plunged 85 percent in the year ended March 31 to 7.38 billion yen after sales declined. Olympus will cut at least 30 billion yen in annual expense by March 2015, revive its imaging business and strengthen microscopy and industrial operations, Woodford said in May.
“I valued his strength in decision making and putting plans into action, but there were differences in management style,” Kikukawa said. Woodford “didn’t focus on the common goal,” he said without elaborating.
Woodford joins Stuart Chambers, former president of Nippon Sheet Glass Co., to leave Japanese companies after a short term as a non-Japanese president. Chambers, a British national, left Nippon Sheet after 14 months as CEO in 2009, citing family reasons.
Public board room tussles aren’t common in a country where only a few of the top major corporations, such as Sony Corp. and Nissan Motor Co., are run by expatriates.
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