Seiko boardroom drama pits founder’s great-grandson against his uncle

Shinji Hattori, a 57-year-old fourth-generation member of Seiko Holdings Corp.’s founding family, became president of the company in a “dramatic boardroom showdown” in April that resulted in the removal of Reijiro Hattori, the company’s 89-year-old honorary chairman, from his executive duties,

the

Wall Street Journal

reported.

Riejiro Hattori is Shinji Hattori’s uncle and a grandson of the founder.

Citing “a report drafted by outside lawyers commissioned by” Seiko as well as interviews with two company executives, the

Journal

reported that Noriko Unoura, a company director who was mentored and protected by Riejiro Hattori, bullied employees with impunity and controlled decisions to fire or demote executives. The company’s managing director, Yoshinobu Nakamura, told the

Journal

that Reijiro Hattori used Unoura as his “sole informant on the company’s internal affairs.”

It wasn’t until this year that the Seiko board’s sole external director demanded a shake-up.

In the aftermath, Unoura was pushed out and Reijiro Hattori was stripped of his executive position, the

Journal

reported. Shinji Hattori told the

Journal

that removing his uncle was “a heartbreaking decision.” But he added:

“There were many employees who were mentally distressed because of Ms. Unoura’s power abuse, and some promising talents were leaving the company.”

Seiko has posted losses in its last two fiscal years, and its revenue has been flat for the past decade, the report noted.

Seiko was founded in 1881 by Kintaro Hattori as a jewelry store and importer of timepieces. It has largely been family controlled over the past 120 years, though nonfamily members have sometimes been tapped as president.

Seiko said it will add a second outside board member and will take other measures to improve its corporate governance, the

Journal

reported. Reijiro Hattori, who remains honorary chairman, is Seiko’s second-largest shareholder with a 9.7% stake. The largest shareholder is the Hattori family’s asset management firm, the article said. (Source:

Wall Street Journal,

June 23, 2010.)