Olympus 2014 Annual Report Download - page 9

Yukihiro Koike
Vice President
Equity Research Department
Morgan Stanley MUFG Securities Co., Ltd.
Profi le
Mr. Koike joined Goldman Sachs Group,
Inc., in 2008, where he conducted
corporate research on the automotive
sector. In 2010, he joined Morgan Stanley
MUFG Securities, where he has focused on
the healthcare sector, specifi cally medical
equipment and specialty pharmaceuticals.
He received a B.S. from Kyoto University
(inPharmacy) and received an MSc in
neurology from the University of Southern
California. Mr. Koike also holds a
pharmacist license.
made numerous important decisions and set several initiatives
into motion. Examples include selling ITX Corporation, which
operated the non-core Information & Communication Business,
entering into a business and capital alliance with Sony Corpora-
tion, and cutting staff size as part of restructuring measures.
Also, we saw the removal of the Security on Alert designation
placed on the Company’s stock by the Tokyo Stock Exchange,
and subsequently we increased capital by approximately ¥110
billion. The Board of Directors discussed these and other under-
takings from various perspectives. These experiences cultivated
mutual understanding among the members of the board, and
I believe that its proceedings now transpire more smoothly.
Today, discussions at meetings of the Board of Directors are
lively and forward-looking, and we fi nd ourselves debating a
variety of topics.
Current State of Corporate Governance and the Board of Directors
and Changes over the Past Two Years
It has been two years since the Company instituted its new management team, and Olympus has implemented several
monumental strategies during that time. How has Olympus changed? How should it target future growth? President
Hiroyuki Sasa conversed with analysts with regard to their evaluation of the Company over the past two years, the
challenges Olympus faces, and their hopes for the Company’s future, receiving their earnest opinions and advice.
(Conversation held on June 17, 2014, in a meeting room of the Company’s head of ce)
Masahiro Shibano
Citigroup Global Markets Japan Inc.
Hiroyuki Sasa
President and Representative Director
Hidekatsu Watanabe
Mizuho Securities Co., Ltd.
Yukihiro Koike
Morgan Stanley MUFG Securities Co., Ltd.
Masahiro Shibano
Director
Capital Markets Origination Department
Citigroup Global Markets Japan Inc.
Pro le
Mr. Shibano received a master’s degree
in economics from the Graduate School
of Economics in the Faculty of Economics
of the University of Tokyo. He joined Nikko
Citigroup Limited (currently Citigroup Global
Markets Japan) in 2005. After being placed
in charge of several sectors, he reached his
current position of covering the precision
instruments and semiconductor equipment
sectors in 2009.
Sasa After the Company’s scandal came to light, Olym-
pus replaced all members of its Board of Directors. At the time,
Isuspect the outside directors that we appointed were dubious
of how far Olympus could be trusted; indeed, taking up a posi-
tion on the board required a signifi cant degree of conviction as
they certainly did not understand the Company. In fact, most
members of the Board of Directors were in this position, and I
remember feeling very tense not knowing how the board should
function under these circumstances. As a representative from
the business execution side, I thought exhaustively about how
I could help the outside directors understand Olympus. By con-
ducting briefi ngs prior to meetings of the Board of Directors,
I believe I was able to communicate the characteristics of our
business as well as its strengths and weaknesses to the outside
directors. Over the past two years, this new Board of Directors
Past, Present, and Future of Olympus
Conversation with Analysts
Watanabe I understand that you were an executive offi cer
when the scandal surfaced. I assume that a number of thoughts
crossed your mind as an executive offi cer, but you probably never
imagined you would be placed in the position of leading Olympus.
Rebuilding the Company’s corporate governance systems was
an unprecedented endeavor. Over these past two years, how
did you drive Olympus forward to fortify the areas in which it was
lacking and make it into the revitalized company it is today?
Sasa The business foundations of Olympus themselves
were solid, particularly with regard to the Medical Business.
While the Imaging Business continued to record losses and
performance in the Scientifi c Solutions Business could not
be seen as impressive, the Company’s frameworks and the
systems that drove the businesses were functioning soundly.
The group presidents were advancing their respective
businesses while looking toward the future and addressing
the challenges faced. This situation continues today. And
I believe that, even at the time of the scandal, Olympus had
solid business foundations. For the non-business elements,
it was necessary to address issues one at a time, looking at
corporate governance and other management systems and
determining what needed to be fi xed and how. For issues of
exceptional importance, we often devoted a great deal of time
to discussions, which sometimes became very heated. For
example, we extensively discussed what we should do about
the potential business and capital alliance with Sony, and we
examined exhaustively the necessity of the increase in capital.
Koike I would think that the Company had options,
other than Sony, for an alliance partner. Why did you choose
Sony, and how has the alliance proceeded in comparison to
your expectations?
Sasa Olympus holds a share of approximately 20% of the
global surgical endoscope market. Sony possesses 3D and 4K
imaging technologies. These technologies have the potential to
strengthen our surgical endoscopes, and this fi eld is one that we
needed to expand. Our initial plan for this alliance called for us
to expand operations using these technologies through our own
sales channels, and this is actually how matters are progressing.
In participating in this alliance, we came to be surprised by Sony.
The ingenuity and speed of this company as well as the breadth
and depth of its technological capabilities were much greater
than we had expected. This fact was something we could not
have known before commencing our alliance.
Shibano With the majority of the Board of Directors
consisting of outside directors, I assume that a signifi cant
amount of time is being devoted to decision making. In terms
of organization, Olympus has already approved plans to revise
business units, and I believe that the Company has established
governance systems that are suffi cient for the time being.
What are your plans for the long term? Do you think that the
current systems represent the ideal form for Olympus, or do
you feel that there is room for improvement?
Sasa At the moment, I believe that our Board of
Directors and its 13 members are ideal. I mean this in terms
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OLYMPUS Annual Report 2014
14 OLYMPUS Annual Report 2014
Hidekatsu Watanabe
Senior Analyst
Equity Research Department
Mizuho Securities Co., Ltd.
Profi le
Mr. Watanabe joined Nomura Research
Institute, Ltd., after graduating from the
Faculty of Economics of Keio University in
1990. Positioned in the Corporate Research
Department, he was placed in charge of
the healthcare sector in 1995. He entered
Mizuho Securities in 2000. Today, he covers
a wide range of fi elds in the healthcare
sector, including medical equipment.