Seven & I Holdings Co. Chairman and Chief Executive Officer Toshifumi Suzuki said Thursday he plans to step down after the company’s board of directors rejected personnel changes he supported, handing victory to activist investor Dan Loeb.
“I’ve decided to step down,” Suzuki told a news conference Thursday afternoon, after the retail giant’s board voted not to replace Ryuichi Isaka, 58, the president of its convenience store unit Seven-Eleven Japan Co.
Loeb last week warned against letting Suzuki position his 51-year-old son, Yasuhiro Suzuki, to succeed him. Loeb said Isaka, who was making most of the group’s profit, should instead be a leading candidate.
The departure of Suzuki, who spent more than five decades at Seven & I or affiliate companies, follows a letter by Loeb that said the company risked taking actions grounded in nepotism rather than what is best for shareholders. Loeb’s Third Point LLC has championed a corporate governance overhaul by Prime Minister Shinzo Abe after pushing for better returns out of companies including electronics maker Sony Corp. and robot manufacturer Fanuc Corp.
Suzuki told reporters that he will resign by late May when the company holds a general shareholders’ meeting, adding that he made up his mind to quit “to take responsibility for the (failed) personnel change proposal.”
At the board meeting held earlier in the day, Suzuki’s bid failed to secure majority support. Of the 15 board members, seven voted for Suzuki’s proposal, six voted against, and two abstained, the company said.
Seven & I set up a nomination committee to ensure transparency in personnel changes in late March. But as discussions ensued, questions were raised about the legitimacy of replacing Isaka.
Suzuki, who started his career at a group company Ito-Yokado in 1963, has been known as a charismatic manager and is credited with introducing the convenience store business to Japan. He has served as a vice chairman of the powerful Keidanren business lobby.
Loeb’s Third Point holds a considerable stake in the retail giant. It expressed its objection in March to the replacement of Isaka, who has led Seven-Eleven Japan since 2009 and has produced good earnings results.
“Seven & I’s management reshuffle is drawing more investors’ attention at home and abroad,” said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. “They are keen to see how proposals were crafted and discussed at the board room, and even more keen to know how directors of the board eventually rejected the proposal in a bid to see if the company’s corporate governance practice is working well.”
The saga is one of the most high-profile efforts by foreign investors to force changes in corporate Japan since Loeb’s Third Point offloaded its stake in Sony Corp. less than two years ago, after trying to convince the company to sell part of its entertainment unit.
Overseas investors are starting to question Japan Inc.’s efforts to becoming more capital efficient, according to an academic last month who penned key parts of the government-backed blueprint for corporate governance overhaul, citing his survey of investors.
“Loeb is probably right that Seven & I has been slow in forcing efficiency and marketing effectiveness in many of its companies and, ideally, it should address this with some urgency,” Roy Larke, co-founder of Japanconsuming.com and a professor of Japanese business at Waikato University in New Zealand, said in an interview before the board meeting.
Loeb’s Third Point did not immediately respond to requests for comment.