Japan’s disgraced Olympus Corp is suing 19 current and former executives, including its current president, for up to almost US$50 million in compensation, as it struggles to recover from one of the nation’s worst accounting scandals.
The maker of cameras and medical equipment said on Tuesday all board members subject to the lawsuit would quit in March or April, leaving it in the extraordinary position for now of continuing with its most senior executive, Shuichi Takayama, and five other directors it is suing for mismanagement.
Olympus shares surged as much as 28 percent on the news, with investors betting the company’s clean-up efforts would help it to avoid a humiliating delisting from the Tokyo Stock Exchange, in turn helping to ensure it stayed on bidders’ radars. The stock ended up 20 percent.
Investors also looked forward to the eventual renewal of the board and to Olympus finally drawing a line under a US$1.7 billion accounting fraud, which has thrown a spotlight on Japan’s reputation for weak corporate governance.
Olympus has lost almost half its market value since the scandal first erupted in October, when it fired its British boss Michael Woodford, a rare foreign chief executive officer in Japan, for questioning dodgy acquisition deals at the heart of the scandal.
“The plan is for the current board members who were found responsible and are subject to lawsuits to complete passing on their roles to avoid any impact on business implementation, and all resign at an extraordinary shareholders’ meeting that is set to be held in March or April 2012,” Olympus said in a statement.
Six of Olympus’ 11 directors are being sued: five of its eight internal directors and one of its three external directors.
Also among those being sued by Olympus are former chairman Tsuyoshi Kikukawa, former executive vice president Hisashi Mori and former internal auditor Hideo Yamada.
Olympus is seeking up to ￥3.6 billion (US$47 million) in damages, with Kikukawa, Mori and Yamada being targeted for the largest amounts.
Sources said on Monday that the Tokyo Stock Exchange was likely to keep Olympus listed under a “security on alert” designation, which would effectively enable it to remain traded provided it showed steady improvement in its internal controls.
The exchange yesterday said it had not reached a decision.