Don’t blame Japan for foreign CEO departures
By Wayne Arnold
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
It’s not Japan’s fault that the country is losing foreign CEOs. The country’s insular culture may have added to the frustration of departing bosses at Nippon Sheet Glass, Olympus and even Nomura. But merger pains, fraud and headstrong directors are problems everywhere. The more they go abroad, the more Japanese companies will have foreign executives.
It’s tempting to see Craig Naylor’s departure from the helm of NSG as part of a broader allergic reaction to foreign best practice. After all, Michael Woodford was booted by Olympus last October, while Jesse Bhattal quit as Nomura’s head of wholesale banking in January. A month later, Howard Stringer stepped aside at Sony. Naylor’s predecessor, Stuart Chambers, left after just 15 months on the job.
Yet the revolving door at NSG doesn’t necessarily indicate distaste for foreign ways or faces. Chambers, who was recruited from Pilkington after NSG bought it in 2006, apparently genuinely wanted to spend more time with his family in the United Kingdom. Naylor, who previously spent 36 years at DuPont, was plucked out of retirement at the age of 62. Now NSG is installing a German as COO and keeping a British Pilkington veteran as CFO. That leaves four non-Japanese on its 11-member board.
Comparisons with Olympus also look a stretch. Like the electronics group, NSG’s balance sheet includes a high proportion of goodwill – the result of its Pilkington purchase. But Naylor’s departure may have more to do with the company’s sliding earnings, particularly as Europe’s crisis and cuts in solar panel subsidies hit sales. In February, the company slashed projections for the year to March 31 from a 15 billion yen profit to a 2 billion yen loss, and said it would cut 12 percent of its workforce.
Besides, it’s not as if Japanese boardrooms are totally devoid of foreigners. Stringer is still Sony’s chairman and Carlos Ghosn still runs Nissan. There will be more: As foreign shareholdings rise and more Japanese retire, demand for international management skills will rise. A shrinking home market and a strong yen are pushing companies to buy into new markets overseas. More companies will undoubtedly tap non-Japanese to navigate. Some will work out. Others will say sayonara.