Yahoo Finance Nidec Elevates Kobe as Seki, Once Seen as Next CEO, Resigns
(Bloomberg) -- Japanese electric-motor giant Nidec Corp. named Vice Chairman Hiroshi Kobe as new chief operating officer and president, putting him in line to potentially succeed founder Shigenobu Nagamori, who has struggled to share control of the company.
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Kobe will move into the role effective Sept. 3, while current president and COO Jun Seki has resigned, effective immediately, the company said Friday.
The appointment comes about a week since Seki was said to be leaving Nidec after less than three years at the firm. Nagamori, who demoted Seki from chief executive officer earlier this year, is planning a management overhaul, people familiar with the matter told Bloomberg News. It follows months of Nagamori publicly disparaging Seki and questioning his ability to lead the manufacturer he started in a shack in 1973.
At a briefing Friday, Nagamori said Seki couldn’t deliver what he’d expected from him, and claimed that he was was wrong to look outside the company for a successor, calling it a “big mistake.”
“Seki made great efforts, but the auto business kept deteriorating under him,” Nagamori said. “I thought he’d be good because he’s familiar with the industry which I would like to focus on in the future, but he couldn’t deliver what I had expected from him. I came to realize that our staff are much better than external personnel.”
Nagamori, 77, took back the CEO role in April after souring on Seki, whom he hired from Nissan Motor Co. in early 2020.
Given all that has transpired, Kobe, 73, will likely face multiple challenges. His place as president will only be short term, Nagamori said, adding that the next president will be picked by April 2024.
“I have 55 years of relationship with Kobe, we know each over very well,” he said. “I have always been tough on him, but he never told me he hates me or wants to quit and leave. I have full trust in him.”
Nagamori has struggled for years to find someone to succeed him at what is the world’s top supplier of motors for everything from computer hard drives to power plants. The founder said that he took back the reins from Seki because of his lackluster performance, saying in an interview with Bloomberg, that he “was in agony” every day as the manufacturer’s share price declined.
Nidec is facing a worsening global economic outlook and needs to prepare by putting in place leaders with deep experience within the company, Nagamori is said to have told senior managers. Caught up in global supply chain turmoil and pandemic, Nidec’s shares are down 33% this year.
“Kobe understands every part of the company and may able to operate as Nagamori expects but due to his age, investors will remain skeptical about the company’s fate in terms of a successor,” Morningstar analyst Kazunori Ito said. “Nagamori needs to understand the company’s lackluster share performance is due to concerns over succession.”
In its most recent earnings, Nidec reported operating profit of 44.7 billion yen ($318 million) for the fiscal first quarter through June, compared with analysts’ average projection of 43.5 billion yen. Revenue rose 21% to 540.4 billion yen, beating the average prediction of 510 billion yen.
At Friday’s briefing, Nagamori said Kobe was the best choice to help shore up Nidec’s share price and stabilize the company, and he said investors needn’t worry about succession issues.
Nidec’s travails reflect a wider dilemma across Japan’s corporate landscape, as leaders who came of age during the country’s economic boom continue to hold on well into retirement age. It’s not the only company grappling with succession. Despite promising to retire at 65, Uniqlo founder Tadashi Yanai, now 73, still runs Fast Retailing Co. with a tight grip. Masayoshi Son, SoftBank Group Corp.’s 65-year-old founder and CEO, has parted ways with several potential successors in high-profile exits in recent years.
Read more: A Startup Offers Japan’s Aging CEOs a Worry-Free Succession Plan
In his interview with Bloomberg in July, Nagamori said his goal was to see Nidec’s share price beat its 2021 record of 15,175 yen. The shares were at 9,019 yen Friday.
Once Nidec’s share price hits a new high, the founder said he’ll look to pass on the CEO post and transition into the role of honorary chairman.
But at the same time, Nagamori said as long as he’s living, he can’t accept handing off Nidec and seeing it stumble. “I built this company from the ground up and Nidec is like a part of my body,” he told Bloomberg. “If the company were to become a failure it’d be like a physical wound for me.”
Indeed, what comes after Nagamori steps down is of key interest to investors in the company. For years, analysts have been warning that a bumpy transition of power would mean Nidec could lose its “Nagamori premium.”
Nagamori said in July he’s given up on finding any one individual capable of filling his shoes. He intends to break up his responsibilities between a number of people, he said. “At this level, there isn’t a person in Japan who can operate this company as CEO alone,” Nagamori said, “it needs to be managed by a group.”
Recently, Nidec has moved to significantly bolster its recruiting activities, poaching prominent executives including Mitsuya Kishida, the former head of Sony Group Corp.’s mobile communications business, and Shinya Yoshida an executive vice president at Mitsubishi Corp.
With regard to Seki, Nagamori in July said the former CEO had not done enough to learn and embody his methods of management since joining the company.
Nidec has a basic policy outlining that the person who contributes most to the company’s profit will claim the top job, Nagamori said. “You may think this is an unsparing company but it’s really the proper way,” he said. “It’s a meritocracy.”
(Updates with comments from Nagamori at briefing.)
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