“I am sorry that things have come to this,” Kumiko Otsuka, 47, coolly told shareholders in the meeting, in which she instructed her father, company founder and chairman Katsuhisa Otsuka, and her mother to identify themselves by name and shareholder number.
The daughter overcame the chairman’s challenge by an undisclosed majority vote.
“I had five children,” the father said from the audience as he pleaded with shareholders to back his return as CEO. “Kumiko was the first and she was a difficult birth.”
Kumiko’s mother also gave a rambling speech criticizing the CEO, until another shareholder yelled at her to stop.
The Otsuka family showdown – virtually unheard of in Japan’s highly scripted shareholders’ meetings – is Japan’s first major proxy battle since the country adopted corporate governance guidelines in time for this year’s annual general meetings. They require institutional investors to reveal how they vote.
The feud, which has gripped the public – one broadcaster carried parts of a Kumiko Otsuka news conference live during a gossipy talk show – also highlights the risk of failed succession planning at Japanese companies with high family ownership.
Infighting at the company, which the 71-year-old Katsuhisa Otsuka founded in 1969, became public after Kumiko began implementing her strategy to deal with competition from the likes of Sweden’s Ikea AB [IKEA.UL] and domestic discount chain Nitori Holdings Co.
The former banker, who succeeded her father as CEO in 2009, sought to ease Otsuka Kagu’s expensive policy of appointing sales staff for each customer, while reducing mailed advertisements. She also opened small shops specializing in Scandinavian furniture and aimed for more cheaper offerings.
“In order to build on the strengths of the past 40 years as a business, we need to implement some reforms to keep up with today’s consumers,” said Kumiko, who was backed by proxy advisory firms Institutional Shareholder Services and Glass Lewis.
The daughter blames the father for last year’s 1.4 billion yen ($11 million) operating loss. Katsuhisa Otsuka counters that his daughter was taking the retailer downmarket.
She was ousted as CEO in July, when the previous board sided with her father, who reversed some of her changes. She returned in January in what her father has called a boardroom coup.
The father defended his record on Friday and criticized his daughter.
“What have I done wrong? If anything, it was in appointing her as CEO six years ago,” he said. “I’m disappointed.”
One shareholder urged reconciliation.
“Old man, your daughter is pretty smart. I think she really cares about the company,” he said. “I would put an ad in the paper, with the two of you shaking hands and saying you’re sorry, and promise to sell furniture for the best price.” – Reuters