To Jesper’s interested (and interesting) readers regarding the rebuttal to my original note:
I welcome dialogue and am happy to be corrected. I do not want to get into a tit-for-tat online in regard to the substantiative comments raised in the rebuttal, though I would be happy to engage the writer(s) in a public forum if doing so would educate me and the public in a useful way. Perhaps we might find more common ground than he or she expects.
One point of common ground that I do want to highlight is our shared admiration for the wisdom and courage of Ms. Watahiki, Mr. Olcott and Mr. Nagayama. I have known George Olcott for nearly twenty years and was directly involved in his recruitment as a board member in one of the first “activist” campaigns in Japan. I do not know Ms. Watahiki or Mr. Nagayama, but I respect what they have done in their work as directors.
Regarding the circumstances surrounding their departures from Toshiba's board, I would point interested readers to the public comments made by Mr. Olcott to the FT on his resignation (June 27, 2021, subtitled: “Activist investors forced departure of popular board leader”) as well as to the public remarks made by Ms. Watahiki on her resignation (Reuters, June 28, 2022). Relevant quotes are attached below. Regarding Mr. Nagayama, I would welcome clarification of the writer’s statement that the "activist did not attempt to oust Mr. Nagayama." If the activist shareholders were in fact supportive of Mr. Nagayama’s continuation as leader of Toshiba, then I stand corrected. The public record (and the statements of both George Olcott and Ambassador John Roos) should probably be corrected as well. It seems obvious from reports at the time that the campaign to oust Mr. Nagayama was led by the activists. Indeed, it seems to be mathematically impossible for Mr. Nagayama to have been ousted without their votes and even more unlikely that a director like George would misunderstand their role. But perhaps there is more to the story.
From the FT
In exclusive remarks made to the Financial Times following his sudden resignation on Friday, George Olcott expressed strong misgivings about the vote to oust Osamu Nagayama — a man he described as one of the few Japanese business leaders able to oversee a turnround on the scale now required by Toshiba. “Removing him as chair only serves to prolong instability and uncertainty in addition to depriving the board of an outstanding leader. I cannot understand how this development represents a good outcome for the company or any of its stakeholders,” said Olcott, a former investment banker at SG Warburg who sits on the boards of several Japanese companies.
From Reuters
Watahiki, a former high court judge, had objected to appointing the candidates put forward by Elliott Management and Farallon Capital Management, saying the pair's presence on the board would skew it toward activist investors.
To quote from my own column dated September 2022, "The foreign hedge funds that took control of a damaged Toshiba in 2017 lacked industry expertise and a mindset to provide a positive vision for the transformation the company badly needed, or to restore a broken corporate culture. They installed foreign directors with accounting and investment banking backgrounds on the premise of maximizing Toshiba's sum-of-the-parts valuation if it were chopped up and the pieces auctioned off.
The last five years have been a tug of war over Toshiba's fate between the hedge funds, on the one hand, and the salarymen and their protectors at the Ministry of Economy, Trade and Industry (METI), on the other.
The foreign directors rejected an unconvincing plan for Toshiba's future cobbled together by the salarymen, leaving the company without a road map to the future. The hedge funds have now finally been granted their demand that Toshiba be sold off, but METI has carefully orchestrated the auction process to winnow out foreign private equity players and leave two syndicates led by obedient Japanese funds as the finalists."
To Jesper’s interested (and interesting) readers regarding the rebuttal to my original note:
I welcome dialogue and am happy to be corrected. I do not want to get into a tit-for-tat online in regard to the substantiative comments raised in the rebuttal, though I would be happy to engage the writer(s) in a public forum if doing so would educate me and the public in a useful way. Perhaps we might find more common ground than he or she expects.
One point of common ground that I do want to highlight is our shared admiration for the wisdom and courage of Ms. Watahiki, Mr. Olcott and Mr. Nagayama. I have known George Olcott for nearly twenty years and was directly involved in his recruitment as a board member in one of the first “activist” campaigns in Japan. I do not know Ms. Watahiki or Mr. Nagayama, but I respect what they have done in their work as directors.
Regarding the circumstances surrounding their departures from Toshiba's board, I would point interested readers to the public comments made by Mr. Olcott to the FT on his resignation (June 27, 2021, subtitled: “Activist investors forced departure of popular board leader”) as well as to the public remarks made by Ms. Watahiki on her resignation (Reuters, June 28, 2022). Relevant quotes are attached below. Regarding Mr. Nagayama, I would welcome clarification of the writer’s statement that the "activist did not attempt to oust Mr. Nagayama." If the activist shareholders were in fact supportive of Mr. Nagayama’s continuation as leader of Toshiba, then I stand corrected. The public record (and the statements of both George Olcott and Ambassador John Roos) should probably be corrected as well. It seems obvious from reports at the time that the campaign to oust Mr. Nagayama was led by the activists. Indeed, it seems to be mathematically impossible for Mr. Nagayama to have been ousted without their votes and even more unlikely that a director like George would misunderstand their role. But perhaps there is more to the story.
From the FT
In exclusive remarks made to the Financial Times following his sudden resignation on Friday, George Olcott expressed strong misgivings about the vote to oust Osamu Nagayama — a man he described as one of the few Japanese business leaders able to oversee a turnround on the scale now required by Toshiba. “Removing him as chair only serves to prolong instability and uncertainty in addition to depriving the board of an outstanding leader. I cannot understand how this development represents a good outcome for the company or any of its stakeholders,” said Olcott, a former investment banker at SG Warburg who sits on the boards of several Japanese companies.
From Reuters
Watahiki, a former high court judge, had objected to appointing the candidates put forward by Elliott Management and Farallon Capital Management, saying the pair's presence on the board would skew it toward activist investors.
Sincerely,
Andrew
To quote from my own column dated September 2022, "The foreign hedge funds that took control of a damaged Toshiba in 2017 lacked industry expertise and a mindset to provide a positive vision for the transformation the company badly needed, or to restore a broken corporate culture. They installed foreign directors with accounting and investment banking backgrounds on the premise of maximizing Toshiba's sum-of-the-parts valuation if it were chopped up and the pieces auctioned off.
The last five years have been a tug of war over Toshiba's fate between the hedge funds, on the one hand, and the salarymen and their protectors at the Ministry of Economy, Trade and Industry (METI), on the other.
The foreign directors rejected an unconvincing plan for Toshiba's future cobbled together by the salarymen, leaving the company without a road map to the future. The hedge funds have now finally been granted their demand that Toshiba be sold off, but METI has carefully orchestrated the auction process to winnow out foreign private equity players and leave two syndicates led by obedient Japanese funds as the finalists."
I hate the term stakeholder, stakeholders are typically scum.