Can New CEO Reignite Toshiba’s Turnaround?

Newly minted CEO Taro Shimada—formerly Toshiba's chief digital officer—will try to revive the company's fortunes.

The sudden resignation of Toshiba CEO Satoshi Tsunakawa proved to be a baptism of fire for new head, Taro Shimada, who was most recently the company’s chief digital officer. Tsunakawa departed a mere three weeks before a March 24 extraordinary shareholder’s meeting to try to end four years of disagreement between Toshiba and hedge funds aligned with activist investors.

With a background in engineering, Shimada joined Toshiba from Siemens in 2018 to strengthen the Japanese conglomerate’s digital-transformation initiatives. He brought nearly three decades of experience, including stints involving aircraft and automobile hardware development, precision machinery design as well as project-lifecycle management platform development.

While his technology credentials are impeccable, a big question remains over whether Shimada’s executive experience in Europe and the US will help him bring one of Japan’s oldest and largest firms up to speed in world where shareholder activists hold sway in turnaround plans.

Shareholders rejected a proposed three-way split of the company in February. At the March meeting, they voted down Toshiba management’s plan to divide the company in half as well as a proposal from its second-largest shareholder, the Singapore fund 3D Investment Partners, to reopen talks with private equity firms and other investors regarding a possible take-private deal.

Shimada now has the freedom to offer his solution to break this impasse. At the press conference announcing his appointment, he highlighted the importance of communicating as equals and the ability to “put yourself in someone else’s shoes.”

Toshiba shares rose following reports that talks with private equity had begun, so it seems Shimada is already learning to walk in those shoes.

Some of the company’s top investors are expected to nominate their representatives for the Toshiba board at the annual shareholder’s meeting in June, to force Toshiba to solicit private equity buyout offers.

Shimada’s plans to breathe new life in Toshiba provide a litmus test on how Japanese boards operate—and could improve Toshiba’s reputation, which was tarnished by poor management and an accountancy scandal.