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Thursday, June 15, 2006
Livedoor execs meet with shareholders
Board gets new directors as investors fret about firm's future with Usen
CHIBA -- Livedoor Co. investors finally had their say Wednesday as the scandal-tainted firm held its first shareholders' meeting since its top executives were arrested in January.
During the extraordinary shareholders' meeting at the Makuhari Messe convention center in Chiba, the Internet firm tried to sever any lingering ties with its disgraced former executives and put fresh faces on the board of directors.
It is also the first shareholders' meeting since Usen President Yasuhide Uno personally purchased a 12.75 percent stake in Livedoor from Fuji Television Network Inc. Usen and Livedoor then established business ties in the Internet portal business.
The shareholders approved several new directors to the board -- President Kozo Hiramatsu, who took over from Takafumi Horie after his arrest in January, Executive Vice President Yukihiro Shimizu and Vice President Noritaka Ochiai.
Usen President Uno, Teruo Masaki, former director of Sony Corp., and Eiji Sato, Usen's director, were named outside directors.
Representative Director Noriyuki Yamazaki, who chaired the meeting, stepped down from his position and Hiramatsu replaced him.
The meeting began at 2 p.m. and ended around 5:20 p.m. As of 4 p.m., there were 1,794 shareholders sitting in the 15,000 seats.
Livedoor has 154,814 shareholders, and roughly 48 percent of the outstanding shares are held by foreign investors.
About 20,000 of them voted via mail and over the Internet before the meeting, according to Livedoor.
"Why did you hold this meeting on June 14, a regular weekday, when ordinary shareholders cannot attend?" complained one man, who identified himself as Sato. "When a company is involved in such a big incident, it should hold a shareholders' meeting on a weekend."
Yamazaki, who chaired the meeting, apologized for any inconvenience, saying Makuhari Messe's tight schedule limited their choice of meeting day.
Another shareholder, who identified himself as a member of the lay Buddhist group Soka Gakkai, said he was touched by President Hiramatsu's determination to rebuild Livedoor.
"I was moved by your spirit when the company is going through a painful period," the man said.
Yamazaki told the audience Livedoor's internal probe showed Horie and the other arrested executives falsified the company's financial figures for the business year to September 2004. The firm is still looking into why they did this, he said.
Hiramatsu said the falsification occurred "because information and authority were concentrated in the hands of some of the former directors and because the company did not have a system to monitor them."
He said the same situation would not happen again because the firm now has a corporate compliance body.
Scion Capital LLC, a U.S.-based investment advisory firm that has a 6.7 percent stake in Livedoor, reportedly opposed the idea of putting a Usen executive into the new management lineup. But there was no strong opposition heard at the meeting.
A Livedoor spokesman admitted some foreign investors had sent them letters filled with questions for the meeting, but declined comment on the details.
Horie, still the largest Livedoor shareholder, with a 17.25 percent stake, also submitted a letter to the meeting through his lawyer, saying he will give his "wholehearted support" to the new management, Livedoor said.
After the meeting, shareholders voiced both hope and concern about the future of the Internet firm.
A 23-year-old shareholder in Tokyo who asked not to be named said he is more pessimistic about Livedoor's future because it is tied to Usen, which he said was shaky.
Although he failed to sell his shares before the company was delisted from the Tokyo Stock Exchange, he hopes it will go public again so he can sell them for a profit.
An 80-year-old shareholder who also declined to give his name said Livedoor President Hiramatsu appears capable of rebuilding the company.
"The way he answered the questions from shareholders was sincere," he said. "I'm placing my faith in him."