American CEO quits Nippon Sheet after "disagreements"

TOKYO Wed Apr 18, 2012 9:07am EDT

Nippon Sheet Glass Co's President Craig Naylor speaks to Reuters journalists during an interview in Tokyo May 18, 2010. REUTERS/Michael Caronna

Nippon Sheet Glass Co's President Craig Naylor speaks to Reuters journalists during an interview in Tokyo May 18, 2010.

Credit: Reuters/Michael Caronna

TOKYO (Reuters) - The American president and chief executive of Nippon Sheet Glass Co Ltd (5202.T) quit the company after less than two years in the post following "fundamental disagreements" with the board over strategy, chairman Katsuji Fujimoto said on Wednesday.

The resignation of Craig Naylor leaves Carlos Ghosn, the chief executive of Nissan Motor Co (7201.T), as the only remaining non-Japanese CEO of a major Japanese manufacturer. Howard Stringer stepped aside as CEO of Sony Corp (6758.T) this month.

Fujimoto dismissed suggestions in a press conference that Naylor's departure heralded the sort of corporate scandal sparked when Japan's Olympus Corp (7733.T) fired Briton Michael Woodford in October.

"Our firm has nothing whatsoever like the situation that happened at Olympus," Fujimoto told reporters.

He said Naylor was leaving after differences over priorities for product development and management organization. He didn't elaborate, but the remarks were still unusually rare for corporate Japan where companies provide little insight into their inner workings.

"This is regrettable but we thank Craig for his efforts over the past two years and wish him well in the future," Fujimoto said. "Our priority now is to concentrate on the future development of the company."

Nippon Sheet Glass, which expects to post its third net annual loss in the last four years for the year that ended in March, said company director Keiji Yoshikawa will replace Naylor.

The firm has spread its business globally in recent years. In 2006, it bought British glass maker Pilkington for about 2 billion pounds, and now gets a majority of its sales from outside Japan.

Indeed, an executive who has done business with Naylor said the board of Nippon Sheet Glass was progressive by Japanese standards.

"They are quite serious about corporate governance," said the executive, who declined to be identified because of the sensitivity of the issue. The board is "totally opposite of the Olympus board," he said.

Naylor, a 36-year veteran of chemicals giant DuPont (DD.N), became CEO of Nippon Sheet Glass in June 2010. He was the second non-Japanese executive to lead the 94-year-old company after Briton Stuart Chambers, who resigned in 2009 after just 15 months to spend more time with his family.

Naylor did not immediately respond to an emailed Reuters request for comment.

INTERNATIONAL

Shares of Nippon Sheet Glass, valued at around $1.3 billion, have slumped 81 percent since the global financial crisis hit, and on Tuesday dropped to 113 yen, the lowest since at least 1984. The company announced Naylor's resignation after trading on the Tokyo Stock Exchange had closed on Wednesday.

"The suddenness of this will be a surprise to investors and should lead to a bit of selling of shares," said Katsuhiko Ishibashi, an analyst at Deutsche Bank Equity Research.

"But I don't think the change in president will be negative for the firm since nothing we've heard so far suggests any sort of corporate scandal," Ishibashi said. "Of more interest is what the firm plans to do about its falling profits."

In February, the company slashed its operating profit forecast for the year to March 2012 to 4 billion yen ($49.5 million) from 25 billion yen and its net forecast to a loss of 2 billion yen from a profit of 15 billion yen.

Bankers have said the slide in the company's fortunes have made it a prime candidate to raise fresh equity, but Chief Financial Officer Mark Lyons said at the press conference the company had no such plans, although it would consider all options in the future.

LEADERS

Non-Japanese business leaders have long been rare in Japan, where companies typically adopt a consensus-building culture that can mean change is slow.

Naylor gave the impression he was facing resistance from other officials at the firm to cutting jobs and others costs in Japan.

"This was no doubt a source of frustration to him," the source said.

Japanese companies also tend to promote from within their Japanese ranks and CEO pay tends to be lower than in other developed markets. Naylor made 173 million yen ($2 million) in the year to March 2011, the company's financial statement says.

Still, Nippon Sheet Glass was seen as more progressive than many other Japanese companies.

The number two and three executives under Yoshikawa are non-Japanese. The firm said on Wednesday that it appointed German Clemens Miller as chief operating officer and said Lyons, who is British, would stay as chief financial officer.

Four of the company's 11 board members are outside directors, a relatively high proportion for Japan.

In addition, Nippon Sheet Glass had been unusually open about why Naylor was quitting, said Jamie Allen, the secretary general of the Asian Corporate Governance Association.

"The fact that the company has actually been quite honest about why he is leaving, that is actually quite positive," he said. "Quite often what you get from companies is simply these people are leaving to pursue personal endeavors or for personal reasons."

Foreign CEOs have grabbed the headlines in Japan in recent months.

Woodford was sacked by Olympus after he questioned dubious deals at the firm worth some $1.7 billion, sparking one of Japan's biggest corporate scandals that prompted authorities in Japan, Britain and the United States to open investigations and soul searching in Tokyo over standards of corporate governance.

At electronics giant Sony, Kazuo Hirai replaced Stringer earlier this year following four years of losses and criticism that the company was losing its competitiveness against rivals such as Apple Inc (AAPL.O). Stringer remains chairman of the firm.

(Additional reporting by Chang-Ran Kim and Yoko Kubota in Tokyo; Editing by Neil Fullick)

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