April 30, 2010 / 12:32 PM / 9 years ago

UPDATE 1-Seiko fires president in rare Japanese dismissal

* Koichi Murano dismissed for “dogmatic” management

* Rare case of board dismissal of top executive in Japan

* External director Harada was one catalyst behind the move

* Founding family member Shinji Hattori is new president

By Yumiko Nishitani

TOKYO, April 30 (Reuters) - Struggling clock and watch maker Seiko Holdings (8050.T) sacked its president for “dogmatic” management and not dealing with a prolonged slump at upscale retail unit Wako, in a rare case of a top Japanese executive being fired.

Seiko said Koichi Murano, 72, was removed from his post on Friday and replaced by Shinji Hattori, a 57-year old executive vice president and the only director related to the family that established the watchmaker in 1881.

Japanese boards rarely dismiss top executives, even when the company is struggling, and are often criticised by corporate governance advocates for failing to hold management accountable on behalf of shareholders.

Seiko said the board voted three to two to dismiss Murano after a motion to remove him was put forth by Akio Harada, a former prosecutor and the company’s sole external director.

“This is significant. For this to happen in Japan, for the post of external director to carry out its function in this way,” said Takeyuki Ishida, head of Japan research at proxy advisory firm Institutional Shareholder Services.

Seiko said Murano blindly followed the directions of honorary chairman Reijiro Hattori and director Noriko Unoura, both of whom were involved in running Wako, and was not making rational management decisions.

The labour union of subsidiary Seiko Precision Inc had also requested an investigation into the management of Wako, a retailer located in a landmark building in Tokyo’s Ginza shopping district, Seiko said.

“We believed that if we left things as they were we would be abandoned by customers, shareholders, financial institutions and other stakeholders,” Shinji Hattori, nephew of Reijiro, told a news conference.

The reshuffle at Seiko comes as a much larger Japanese company, Fujitsu Ltd (6702.T), is embroiled in a dispute over the ousting of former president Kuniaki Nozoe, who has said he was unfairly pushed out for suspected links to organised crime.

Fujitsu has come under fire for not disclosing the real reason behind Nozoe’s resignation when it was announced in September.

“We are doing the opposite of what Fujitsu did. But that case didn’t prompt us to take this action. We took action because of our own sense of crisis,” said Hitoshi Murakami, a senior executive director at Seiko Watch, a unit of Seiko Holdings.

Prior to the announcement, shares of Seiko Holdings closed unchanged at 224 yen, giving it a market value of about $440 milion. The company is forecasting its second straight loss for the financial year ended last month. (Reporting by Nobuhiro Kubo and Nathan Layne; Editing by Hugh Lawson and Dan Lalor)

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