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 The patriarch's sudden departure without a named successor creates a
power vacuum at the sprawling conglomerate, with its 50,000
employees and $90 billion in sales, just as it revamps struggling
supermarkets and department stores.
The boardroom surprise at one of the country's biggest firms also
signals a change in atmosphere in Japanese corporate governance,
where management traditionally enjoyed support by big shareholders
and board members.
The 83-year-old Chief Executive and Chairman Toshifumi Suzuki said
he decided to quit after a board meeting in which he failed to
garner enough votes to replace the president of group convenience
store chain, Seven-Eleven Japan.
"It is my lack of virtue and I am unbearably ashamed," Suzuki told a
news conference, without elaborating on the timing of his
resignation.
"I was supposed to attend an analyst meeting tomorrow. But I cannot
go there and explain this year's prospects anymore after I decided
to quite."
RETAIL LEGEND
Suzuki is a legendary figure in Japan's retail industry. He brought
the 7-Eleven franchise to the country in the 1970s and later took
over its U.S. parent.
In past weeks, Suzuki's company has been the target of activist
investor Daniel Loeb, who wrote an open letter voicing concerns over
rumors Suzuki planned to appoint his son as successor.
Earlier on Thursday, Suzuki's management proposed replacing the man
Loeb had instead championed for the top job - Seven-Eleven Japan
President Ryuichi Isaka. Suzuki contended Isaka had failed to meet
expectations. It was not immediately clear whether Suzuki had
proposed an alternative.
Seven & i did not immediately respond to a request for comment from
Isaka when contacted by Reuters.
Of 15 board members including four outside directors, seven voted in
favor of the proposal while six voted against. But with two casting
blank votes, the proposal did not garner a big enough majority,
Suzuki said.
"I don't care about the breakdown of the votes, I consider I have
lost the confidence of the board when no-votes were cast by inside
directors," Suzuki said, adding, "I am not going to name my
successor."
Shares of Seven & i lost as much as 8.6 percent in morning trade,
but pared losses after news of the vote and after reports of the
CEO's departure. The stock closed down 1.6 percent, versus a 0.2
percent rise in the benchmark Nikkei index <.N225>.
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On Thursday, Seven & i also reported a 2.6 percent rise in operating
profit for the year ended February, at 352.3 billion yen ($3.25
billion).
RARE REBELLION
The failure is a rarity in Japan where corporate boards
traditionally endorse management, particularly at Seven & i, where
Suzuki has held sway for decades.
It is not clear who will succeed Suzuki but the retention of Isaka
will for now be claimed as a victory for Loeb, CEO of investment
advisor Third Point and a rare outsider challenging corporate Japan.
In the open letter, Loeb urged the retailer to retain Isaka, saying
"rumors" of Isaka's planned removal were of "significant concern."
Loeb, who previously campaigned for change at companies such as Sony
Corp <6758.T> and Fanuc Corp <6954.T>, said Isaka had been
"instrumental to the success of Seven-Eleven Japan."
The chain has regularly accounted for nearly 70 percent of Seven &
i's profit.
Loeb's company Third Point, which owns an undisclosed amount of
Seven & i, did not immediately respond to a request for comment.
Also in Loeb's letter, the activist investor raised concerns about
rumors that Suzuki was grooming his son, Seven & i's Chief
Information Officer Yasuhiro Suzuki, as his successor.
The elder Suzuki said he was surprised at such rumors having never
"uttered any such things," and that his son did not consider such
prospect.
The board's latest decision comes as Japanese firms work to improve
corporate governance through measures such as appointing more
outside directors, after the government called on companies to do
more to attract foreign capital.
Last month, Seven & i said it had set up a nomination and
compensation committee headed by an outside director.
(Reporting by Taiga Uranaka and Ritsuko Shimizu; Editing by
Christopher Cushing)
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