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Toshiba CEO steps down as objections to re-org persist

Architect of rejected three-way split passes the baton as decision day looms

Toshiba has made a raft of new executive appointments as its reform plan meets with renewed opposition.

The beleaguered Japanese giant today announced [PDF] the departure of CEO Satoshi Tsunakawa, and the appointment of current corporate senior vice president Taro Shimada as his replacement.

No explanation was offered for Tsunakawa’s departure, but it’s not hard to guess the reasons: on his watch Toshiba devised a plan to split the company into three entities to realise more value for shareholders and help to put a string of scandals in the past.

The plan was opposed by big investors so Toshiba devised a second plan, this time proposing to split into two entities .

The second restructuring plan did not stop sniping about Toshiba’s direction. In recent weeks the company has had to fend off opinions from private equity firms who feel Toshiba needs a cleansing period in private ownership, as the restructuring needed will be more easily accomplished without the inconvenience of shareholder intervention.

Toshiba today also announced that one element of its new governance plan won’t be put to a vote at its forthcoming extraordinary general meeting, after one investor opposed it.

Governance matters at Toshiba because some of its recent troubles – such as an accounting scandal, and an a influence-peddling scandal that saw attempts made to secure government help to limit investor influence over board appointments - were seen as products of lax internal regulations and review practices.

Execs had set the scene for the March 24 EGM to both sign off on the second restructuring plan and the new governance regulations. With both the new plan and new governance arrangements in place, Toshiba execs hoped they would have a clean slate from which to rebuild the company.

Now that meeting will be overseen by an interim CEO who will have spent less than a month in the job, and numerous other new execs whose appointments are temporary.

Tsunakawa, meanwhile, will remain a company director and assess the performance of the new executive ahead of the proposed re-org.

If it happens – it is by no means certain that long-suffering Toshiba investors will give approval to the plan on March 24th. ®

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