Toshiba wants new blood to lead its board; Interim president stays

Toshiba Corp has restructured its board of directors, getting mostly people from outside the company, including three former chiefs of major Japanese companies.

The Japanese major is confident that the new reshuffle at the top managerial positions will bolster corporate governance. Still some investors doubt the restructuring measures as how far these would deliver dividends after the $1.2-billion accounting fraud.

Toshiba will have seven outside directors on its 11-member board.

Toshiba seems to have given priority to the top-notch result-oriented performers from major Japanese companies. One official inducted into the board has a record on governance reforms. Market analysts say that newly appointed ones on the board were just taking a turn doing a task for the business.

"They're stuck with the hot potato and must be at a loss as to what to do. It's doubtful that they'll think of themselves as people with skin in the game," opines Yasuo Sakuma, Executive Officer (Equity investment management) at Bayview Asset Management.

Some investors expected to see new President at Toshiba Corp. But dashing these hopes, the restructuring of board has retained Masashi Muromachi, who's an interim President, in the present responsibility on a permanent basis. Toshiba believes that this move would ensure stability.

The restructuring exercise came at a time when Toshiba is reeling under a severe pressure of fraud. On the other hand, the Japanese government is also making efforts to transform world's third largest nation's companies attractive to foreign investors.

The Japanese government has framed governance guidelines for the listed companies. As part of this, independent directors are finding their ways into the corporate boards.

Toshiba had four directors from outside and two of them were diplomats. This resulted in criticism as these outside directors doesn't have relevant experience in rendering their responsibilities. They were not in a position to lead top executives at the company.

Mitsubishi Chemical Holdings Corp is also part of the new members on the board. Keizai Doyukai Group's Chairman Yoshimitsu Kobayashi and former President of Asahi Breweries Koichi Ikeda are also new members on the board.

Shiseido Company's former Chief Executive Shinzo Maeda has also been inducted into the Toshiba's board.

Toshiba Corporation is scheduled to seek shareholders' approval in an extraordinary meeting in September. The Japanese major is expected to post a net loss for the financial year ending March 2015 while operating profit is expected to be $1.4billion (170billion yen).

During the last financial year, Toshiba revised its forecast of 120 billion yen profit and postponed its earnings results as an investigation into accounting fraud was going on.