The resignation of all nine private-sector executives from Japan’s largest public-private investment fund was formalized on Friday, bringing a conclusion to their dispute with the government, which had deemed their remuneration package as “too high.”
The departures of Japan Investment Corp. President and CEO Masaaki Tanaka and eight others from the 11-member board became official with approval at an extraordinary shareholders meeting, effectively suspending the operations of the fund created just three months ago.
It was also decided that Mikihide Katsumata, the president of the fund’s subsidiary INCJ Ltd., will double as an executive board member. The board of the entity is now left with Katsumata and just two other executives from the industry and finance ministries.
The Ministry of Economy, Trade and Industry aims to pick Tanaka’s successor from among investment experts in the private sector and launch new management by spring.
The fund was set up in September to enhance Japan’s business competitiveness by investing in entrepreneurial ventures and local companies focused on emerging technologies.
Of the roughly ¥300 billion ($2.71 billion) invested into the fund, some 95 percent comes from the government and the rest from private companies. The government also provides a ¥1.8 trillion debt guarantee.
The mass resignation at the fund came after the ministry, which supervises the entity, said in November it has decided to retract the executive remuneration offer of over ¥100 million a year that it had proposed to the fund in September, for being “too high.”
Tanaka insisted on the provision of a suitable level of payment for globally competitive personnel, but the ministry said the amount meant it would be difficult to get taxpayers’ support. It also said there was a lack of transparency in the fund’s operation and urged budget cuts and more involvement by the government.
During a news conference on Dec. 10, Tanaka criticized the ministry, saying its unilateral retraction of the remuneration offer shows that “Japan is not a country ruled by laws.” He said trust between the fund and the ministry had been broken and denied that he and fellow executives were resigning solely over money.
Industry minister Hiroshige Seko apologized for presenting a remuneration plan that was yet to be finalized and decided to voluntarily return a month’s pay over the handling of the matter.
The ministry will hear opinions from advisers on the level of remuneration and the ministry’s involvement in the fund and will make a conclusion in January.