Olympus, a company mired in scandal over a series of murky acquisition figures and a seemingly revolving door at the senior executive level, is now facing a crisis of confidence from investors.
On Wednesday, Oct. 26, the president and chairman of the Olympus, Tsuyoshi Kikukawa, resigned and was replaced by Shuichi Takayama, a director of the company. Kikukawa had taken charge of Olympus on Oct. 14 after he abruptly fired the former head of the company, the Briton Michael C. Woodford, citing cultural differences in management styles, The New York Times reported.
Woodford later said he had been fired after raising questions over a series of acquisitions made by Olympus at what he said were inexplicably high prices or involving disproportionately pricey advisory fees totaling $687 million paid to now defunct companies for Olympus’ 2008 acquisition of Gyrus, a British medical equipment maker.
In the turmoil since Woodford’s departure, Olympus shares have lost over half their value, and some of its largest shareholders have demanded more disclosure, including to whom the payments were made out to and whether there were any conflicts of interest in any of the dealings, said the Times.
At a press conference held Wednesday in Tokyo to announce Kikukawa's departure and introduce Takayama as Olympus' new president, Takayama said, “Recognizing the seriousness of the situation, I have decided to spearhead our efforts to restore confidence.”
During a question-and-answer session, many of Takayama's responses referred to an upcoming third-party inquiry, which he said will get to the bottom of the company's turmoil, and that it wasn't appropriate to comment at the time.
Woodford told the Times that Kikukawa’s resignation was not enough to win back investor confidence in Olympus. He demanded that the entire board—which had been aware of his allegations, he said, yet voted to fire him instead of investigating the claims—should go.
In response to a question about the company’s stock price, Takayama said he believes that it will definitely recover because the fundamental value of the company hasn't changed. However, when management turnover and financial discrepancies cause a considerable shift in both investors' and the public's confidence in a company, its perceived value has changed.
As the new organizational head, should Takayama have been as transparent as possible at the press event, or was waiting for the results of a more credible, third-party investigation into recent events the right PR move?