The next annual general meeting is not due until June next year, but the company can call an extraordinary general meeting to decide whether the current 15-member board should stay on (they were elected on 29 June this year). Until that happens, the only way to remove Kikukawa and other board members is their voluntary resignation. Woodford has said that some shareholders have asked him not to resign.
The company is likely to wait for the findings of the 'external panel of experts' before deciding whether to call an EGM. Olympus has yet to name the panel's members nor has it made clear what its objectives will be, the scope of its investigation and whether the company will be bound by its findings. The markets will be closely watching whether the panel will indeed be expert and external – i.e., independent.
Late bloomer
There are questions about whether Takayama can be an effective leader. Like Kikukawa, he is a long time Olympus employee in Japan, having joined the company in 1970 after studying electronic engineering at little-known Nagaoka National College of Technology.
He became a general manager only 26 years later, in 1996, but steadily climbed the managerial and executive ranks to become Group President of the Life and Industrial Systems Group last year. He assumed office as President and Representative Director of Olympus Imaging Corporation, the company’s money-losing maker of digital cameras and voice recorders, in April this year.
Now head of the entire group, the late-blooming veteran faces the task of carrying out “drastic structural reforms across the board for the purpose of proactively promoting global strategies,” which is the company’s key objective, according to its 2011 annual report.
This is what Woodford was supposed to do. Kikukawa had promoted Woodford from Executive Managing Director of Olympus Medical Systems Europa to the top post in Japan on the strength of his success in cutting costs and promoting efficiencies in Europe.
It remains to be seen whether Takayama can continue the progress that the board had praised Woodford for, several days before he was fired – that Woodford had created “an environment where change is not only accepted, but actively encouraged.”
State of denial
But some analysts are already shaking their heads at Takayama’s first days. His insistence that everything is above-board at Olympus, instead of leaving it to the putative external panel of experts to come to a conclusion, is seen as indicative of Olympus’s state of denial.
At a sometimes contentious press conference in Tokyo on 27 October, the new president blamed Woodford for releasing internal data. “If this secret information had not been leaked, there would have been no change in our corporate value,” he said, an extraordinary statement from a listed company expected to exhibit transparency and good corporate governance.
The “secret information” included massive advisory fees to the tune of US$687 million that Olympus paid in connection with the US$2.2 billion Gyrus deal and the US$773 million it paid for three domestic firms in 2006-08. The combined capital funds of those three companies amounted to only US$18.7 million at the current exchange rate.
Takayama said the huge fees paid for the Gyrus deal “will pay off considering what value we will gain from the Gyrus acquisition in the future,” and portrayed the purchase of the three domestic enterprises as part of a strategy “to find new growth areas to reduce our over-reliance on the endoscope business.”
But his defence met considerable scepticism. “This was not an adequate explanation of whether the fundamental values of the acquisitions were reasonable and likely will not win back the trust of investors,” Shigeo Sugawara, a senior investment manager at Sompo Japan Nipponkoa Asset Management, told Thomson Reuters news agency.
2013, May 21 
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