Toshiba CEO’s sudden resignation throws $20bn CVC deal into doubt


The chair of Toshiba’s board cast doubt on CVC’s proposed $20bn buyout on Wednesday as the Japanese conglomerate confirmed the sudden resignation of its chief executive.

The departure of Nobuaki Kurumatani follows an unprecedented shareholder rebellion, management’s defeat in a high-profile clash with activist funds and signs of a significant split on the Toshiba board over the approach made by CVC Capital Partners and other private equity funds.

The submission of CVC’s preliminary proposal last week raised the possibility of Toshiba being taken private in what would be Japan’s biggest leveraged buyout. Although one person close to the Toshiba board said the CVC proposal “looked absolutely serious” and contained an appropriate level of detail, attention has focused on Kurumatani’s previous role as CVC’s head of Japan and the presence of a senior adviser to the European buyout group on the conglomerate’s board.

“CVC claims it will submit a more detailed proposal, but it is impossible to evaluate the proposal at this point,” Osamu Nagayama, Toshiba’s chair of the board, said at an online news conference. “The initial proposal notes that the management will be maintained. With Mr Kurumatani resigning, we don’t know what their thinking is now.”

A person close to the Luxembourg-based fund added that there was no clarity about “CVC’s next move”. 

Atsushi Akaike, the head of CVC in Japan, was not immediately available for comment.

Despite the turmoil at Toshiba, shares in the company rose as much as 8 per cent on Wednesday to reach their highest level since April 2015, just before the company was caught in a massive accounting scandal that began six years of reputational and financial crises. 

Investors said the share price would remain strong on the prospect of Toshiba being “in play” as a potential buyout target, with expectations high that KKR and others might enter higher bids than CVC in the coming weeks.

Toshiba’s board said it had appointed Satoshi Tsunakawa to replace Kurumatani. Tsunakawa, who was also Kuramatani’s immediate predecessor, made the decision in 2018 to issue $5.4bn worth of new shares in a move that stuffed the register of one of Japan’s most famous companies with aggressive foreign shareholders.

Nagayama sought to deny that Kurutamatani’s resignation followed a boardroom coup triggered by opposition to CVC’s bid, claiming personal reasons were behind the decision to step down. In a statement read out at the news conference, Kurumatani said he wanted to spend more time with his family after “completing” his mission to revive Toshiba. 

Both Tsunakawa and Nagayama made multiple references to Toshiba’s “successful” return to the first section of the Tokyo Stock Exchange in February after its three-and-a-half-year demotion to the second section as punishment for its accounting scandal. The return was made possible by a historic change in the TSE rules.

According to several people close to the company, the chair belonged to factions within Toshiba who were unhappy with the way Kurumatani was managing the company and dealing with activists.

Tsunakawa, 65, said he would work to build “favourable ties” with the company’s activist investors and aimed to hand over the chief executive role to the younger generation in the near future.

China considers mixing vaccines to bolster efficacy


China’s Center for Disease Control is thinking about mixing vaccines and varying the sequence of doses to boost efficacy. It is the first time a government body has discussed publicly that there are concerns over the effectiveness of Chinese jabs.

Gao Fu, the CDC head, told a forum on Saturday that the agency was “considering how to solve the problem that the efficacy of existing vaccines is not high”, according to local media.

In a now unavailable Weibo social-media post, the influential “Vaccines and Science” account said Gao’s comments were “very candid”. But it also reminded readers that taking the jab was still important for protecting the country. It added that “we can’t wait for vaccines to become perfect before getting vaccinated”.

Gao proposed mixing different vaccines as well as amending the sequence of doses, such as changing the number and quantity of doses, and the interval between them.

Some of the WeChat social-media posts on Gao’s remarks were swiftly censored, according to Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations.

“It is the first time . . . a government official publicly admitted that the protection rate is a concern in the vaccination drive,” Huang added.

China had administered 65m doses across the country by the middle of March.

Unlike other vaccine producers, China’s manufacturers have not published their phase 3 trial data, leading to accusations of a lack of transparency over their effects on different groups.

Any new strategy will have ramifications for the more than 20 countries that China said it was supplying jabs to in mostly bilateral “vaccine diplomacy” deals. As of March, China had supplied 40m doses abroad.

Chile is facing another Covid wave from new variants, despite a successful rollout of China’s Sinovac vaccine. The efficacy of one jab was only 3 per cent, compared with 56 per cent with two shots. Experts, however, have not linked the latest wave to the vaccine’s efficacy rate.

Vaccine makers in other countries have conducted dosage experiments, too. In the UK, Oxford/AstraZeneca researchers stumbled upon the efficacy of lowering the initial dose after a dosing error.

Gao also suggested mixing different vaccines. For now, the only jabs approved for use in China are the traditional “inactivated virus” vaccines produced by Sinopharm, Sinovac and other domestic groups, which are similar in mechanism to Oxford/AstraZeneca.

Sinopharm claims a 79 per cent efficacy rate, similar to the rates recently achieved by AstraZeneca in its US trials. However, while AstraZeneca revised down its rates after facing criticism for releasing incomplete data, neither Sinopharm nor any of its Chinese peers have released phase 3 data for public scrutiny.

Sinovac Biotech’s CoronaVac vaccine has an overall efficacy rate of 50.66 per cent among people aged between 18 and 60 years old, according to documents published by a Hong Kong panel of experts.

However, CoronaVac phase 1 and 2 data published in the Lancet found the shots were “safe and well tolerated”.

Gao also warned that reopening China’s borders to foreigners, who have been barred from entering the country since March last year, posed a risk to elderly people, who have not yet been vaccinated.

The timing of relaxing border restrictions will affect attendees at Beijing’s Winter Olympics in February 2022.

Anglo-American to demerge South African coal assets


Anglo-American is to transfer its South African thermal coal assets into a new company, in a move to exit the polluting resource amid growing investor pressure.

The demerged company, Thungela, will list on the Johannesburg and London stock exchanges, Anglo-American said on Thursday. Thungela produced 16.5m tonnes of coal last year and has assets worth $1.3bn.

“As the world transitions towards a low-carbon economy, we must continue to act responsibly,” said Mark Cutifani, Anglo-American’s chief executive. “Our proposed demerger of what are precious natural resources for South Africa allows us to do exactly that.”

Mining companies have been under pressure to divest from coal mines. Rio Tinto sold its last coal mine in 2018 and BHP is also looking to exit its thermal coal business.

Anglo-American investors will each receive one share in Thungela for every 10 Anglo-American shares they hold, the company said.

South Korea’s LG to exit global smartphone business


South Korea’s LG Electronics will close its lossmaking smartphone business after years of struggling to compete against rivals ranging from Apple to low-cost Chinese upstarts.

The Seoul-based group announced on Monday that it would formally exit the industry and instead focus on growth areas such as vehicle components.

LG has lost ground in smartphones as the global market has become more saturated. It has also faced pressure from cheaper Chinese competitors in the low-to-mid end segment while being outmanoeuvred by Apple and local rival Samsung Electronics in the premium part of the market.

The company’s mobile phone business has posted cumulative losses of nearly $4.5bn over the past five years, with its global market share falling to about 2 per cent, according to research provider Counterpoint. The business reported Won5.2tn ($4.6bn) of sales last year, or 8.2 per cent of LG’s total revenues.

“We will end production and sales of the mobile phone business due to its continued slump amid stiffer competition,” the company said in a regulatory filing. “We will improve our business portfolio by efficiently focusing our resources on core areas.”

The company added that its withdrawal from smartphones would improve its competitiveness and financial status in the long term, although the decision could dent short-term sales.

LG was a big player in the global mobile phone market prior to the emergence of feature-laden smartphones, where it was a latecomer.

Investors had called for the company to wind down the smartphone business, arguing that it represented a misallocation of resources that weighed on LG’s stock market valuation, despite robust sales of premium home appliances and televisions.

“Being late is always better than never,” said Daniel Kim, an analyst at Macquarie, of LG’s decision to retire from the sector. “It entered the smartphone market too late and couldn’t scale up amid stiff competition in the saturated market.”

LG’s fortunes in the smartphone market stand in sharp contrast to Korean adversary Samsung, which has surged into pole position globally. LG shipped 23m phones last year compared with 256m for Samsung, according to Counterpoint.

LG has dropped out of the global top seven players by market share as successive failures of its flagship smartphones have cost it ground against fast-rising Chinese groups such as Huawei, Xiaomi and Oppo.

But it had remained the third-largest smartphone maker in North America and the fifth-largest player in Latin America by market share.

The company is expected to shift more of its resources towards the fast-growing electric vehicle components business, taking advantage of its ties with affiliates including battery leader LG Energy Solution, display maker LG Display and camera module supplier LG Innotek. The company plans to launch a joint venture with automotive supplier Magna International in July to make components for electric vehicles.

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Taiwan train derailment kills at least 36 and injures scores more


A train crash in eastern Taiwan has killed dozens of people, in what could be the country’s worst rail disaster in decades.

At least 36 people were dead and 44 injured, the transportation ministry said. The fire department said the number of casualties was likely to increase.

The train, which was carrying 350 people and was travelling from Taipei to the south-eastern city of Taitung, derailed on Friday morning close to Qingshui, a scenic stretch of coastline where marble cliffs drop into the Pacific Ocean.

The government said the crash was believed to have been caused by a construction vehicle that dropped from the highway on to the tracks. The train was derailed after colliding with the vehicle, and then hit the wall of the tunnel.

The first four of the train’s eight carriages were deformed and half of the driver’s cabin was sliced off, according to the transportation ministry and local media accounts. It took rescue workers until noon to gain access to the train.

The crash occurred on the first day of a four-day holiday that is typically a busy travel period. Many Taipei residents travel to the east, a popular tourist destination, and people based in the area return home.

Footage from the site broadcast on local television showed passengers making their way on foot along the rail tracks.

In 2018, a rail crash in north-eastern Taiwan killed 18 people and injured 175.

Eastern Taiwan is blocked off from the rest of the island by towering mountain ranges. The area where the crash occurred is known for hazardous traffic conditions. The only road linking the main eastern city of Hualien to the north of the island passes the sheer cliffs with narrow curves in several places.

A year ago, an improved road circumventing some of the most dangerous sections with tunnels was opened. Because of frequent rockfalls, the old road also requires almost constant repair work.

Ireland unveils remote working plan to redress urban-rural divide


Ireland is seizing the “unparalleled opportunity” offered by changing pandemic-era work habits to shift people from major cities to the rest of the country, envisaging a network of remote working hubs and rejuvenated town centres in an effort to redress the country’s longstanding rural-urban divide. 

The Irish government unveiled its “Our Rural Future” strategy on Monday, ahead of a promised announcement on easing a three-month lockdown. Some of the measures currently in force, notably a ban on non-essential travel further than 5km, have hit rural dwellers particularly hard.

The plan, the first of its kind launched by a European country since the start of the pandemic, includes creating a network of more than 400 remote working hubs, and introducing tax breaks for individuals and for companies which support homeworking.

The government has set a target of 20 per cent of Ireland’s 300,000 civil servants moving to remote working by the end of the year. Other measures include “financial support” to encourage people to live in rural towns and accelerated broadband rollout.

“As we recover from the impact of the COVID-19 pandemic, an unparalleled opportunity exists for us to realise the objective of achieving balanced regional development and maximising recovery for all parts of our country,” Irish Taoiseach Micheál Martin told reporters.

The rural-urban divide has dominated Irish politics for decades. But, Heather Humphreys, minister for rural and community development, said the country now has “an unprecedented opportunity to turn the tide”.

“The biggest mistake we can make as we emerge from the pandemic is to go back to the old normal.”

Ireland’s last big decentralisation push was in the early 2000s, when government departments were moved from Dublin. That move delivered far fewer jobs to the regions than originally expected. Humphreys said this plan was different. “This is a modern, worker-led decentralisation, not focused on buildings but on people.”

Just one of the 152 measures in the plan has a deadline attached. And none has been costed, though ministers stressed that funding was available. Humphreys promised to give more detail next week on what could be achieved this year.

Other European countries face similar questions about how their cities will change in the wake of shifts in working practices brought about by the pandemic.

Ian Warren, a director at the UK’s Centre For Towns think-tank, said that the Irish plan looked “very promising”, adding: “The belief in the UK is that cities have been the focus for government intervention for too long, and that there needs to be a better balance in terms of investment.”

Working from home in Kerry, Ireland © Lionel Derimais/Alamy

Warren stressed that “lots of investment” was required to manage population shifts, including “very good infrastructure, broadband, good housing, good public services, good transport”, as well as access to green spaces and culture. 

Tax incentives of the sort Dublin is promising were “just one lever that you can pull”, Warren said. 

The launch event for the plan featured video testimonials from several women who had moved to the Irish countryside in recent years. They cited a range of benefits, including not having to commute, being closer to family and more affordable housing.

The prospect of others following in their wake is already unnerving Dublin businesses, many of which have been shuttered for most of the last year under one of Europe’s tightest lockdowns.

The Samuel Beckett Bridge over the River Liffey in Dublin © Hollie Adams/Bloomberg

“Office workers are the bedrock of the Dublin economy,” said Richard Guiney, chief executive of DublinTown, which represents 2,500 businesses in the Irish capital. He said the plans bore evidence of a “clear anti-Dublin bias”.

But Ronan Lyons, economist and director of social research at Trinity College Dublin, said the multi-faceted appeal of cities could mean that people are reluctant to leave.

“Cities are not just about where you work, they’re also about how you live,” he said. “It’s hard to see people who were hoping to have the breadth of what cities offer choose to give that up for smaller towns.” 

Lyons added: “This is just one manifestation of something that has come up again and again in Irish policy for over a century. Irish politicians . . . want to reward rural constituencies.” 

Claire Kerrane, rural development spokeswoman for the opposition Sinn Féin party, said the plan was “very welcome . . . really positive”.

“The big question is whether it will all be implemented, and how quickly,” Kerrane said, adding that while it was “nice to have documents and nice ideas . . . we need a clear road map”. 

 

Hong Kong halts BioNTech vaccinations over packaging concerns


Hong Kong has suspended administering BioNTech’s Covid-19 inoculation, in a move that threatens to further slow the pace of the city’s sluggish vaccine rollout and delay the easing of travel restrictions.

Macau, the Chinese territory near Hong Kong, also halted its BioNTech vaccine drive, citing packaging defects with a batch of the shot distributed in both cities by Fosun Pharma.

The Hong Kong government said the defects were related to the caps that closed the vial bottles.

“BioNTech and Fosun Pharma have no reason to believe that product safety is at risk,” both governments said on Wednesday, adding that “to be cautious”, vaccinations of the batch would be suspended pending an investigation.

Hong Kong’s free inoculation programme, which offers the public a choice between BioNTech’s shot and a jab manufactured by Chinese company Sinovac, has been handicapped by widespread vaccine hesitancy.

This has partly been stoked by distrust towards Chinese-manufactured products. Many Hong Kongers also feel there is less urgency to be inoculated given the city’s success in controlling the virus.

Hong Kong’s economy has been battered by the 2019 anti-government protests and the pandemic, and a speedy vaccine rollout was viewed as the city’s best chance to reopen to business travellers and tourists. 

The government has enforced a conservative quarantine approach after mainland Chinese authorities demanded the city report a near-zero case count before allowing cross-border travel to be exempted from quarantine.

International business chambers have lobbied unsuccessfully for a partial relaxation of these restrictions, which include a strict 21-day hotel isolation period for incoming residents.

The announcement of the vaccine suspension immediately hit stocks in the territory, with the Hang Seng index falling 2.1 per cent on Wednesday. Fosun International’s Hong Kong-listed shares were down 3.3 per cent.

By Wednesday, about 150,200 people had received the BioNTech vaccine in Hong Kong and 252,800 had taken the Sinovac shot, out of a population of 7.5m.

The same 210102 batch was also being distributed in Macau, and both territories’ governments said they made the decision to halt vaccinations after receiving written notice from Fosun.

William Chui, president of The Society of Hospital Pharmacists of Hong Kong, said that some aluminium vaccine seals were loosened. But it was unlikely the doses already distributed had been contaminated, he added, because they were also closed with rubber stoppers and it was usual practice to set aside those with loosened seals. 

Siddharth Sridhar, a virologist at Hong Kong university, said experts were waiting for further information from the company, but that the defect was unlikely to lead to a decrease in the efficacy of the shots.

Constance Chan, Hong Kong’s director of health, said the packaging issues, such as dislocated caps, stained bottles, leakages and cracks in containers, were found in a few dozen vials of the shot. She said the vials were not used and that Fosun would investigate the manufacturing and transportation process.

Renesas warns of hit to global chip supply after factory fire


Renesas Electronics, one of the world’s largest makers of chips for the automotive industry, has warned that a fire at one of its factories could have “a massive impact” on global semiconductor supplies and halt production for at least a month.

The timing of Friday’s fire at the advanced chip facility in Japan could not be worse for carmakers, which were already wrestling with widespread disruption to supply chains caused by the Covid-19 pandemic as well as the US cold snap that led to mass blackouts in Texas. 

“We are concerned that there will be a massive impact on chip supplies,” Hidetoshi Shibata, chief executive of Renesas, said at an online news conference on Sunday. “We will pursue every means possible to minimise the impact.” 

The fire broke out in one of the clean rooms at the company’s plant in Naka city, north of Tokyo, bringing to a halt the production of 300mm wafers and burning about 2 per cent of the facility’s manufacturing equipment.

About two-thirds of the affected production was automotive chips, according to Shibata. If the facility remains offline for a month, he added, Renesas will lose about ¥17bn ($156m) in revenue. The financial hit is not expected to have any impact on the group’s plan to buy Apple supplier Dialog for €4.9bn.

Both Renesas and its automotive clients, including Toyota and Nissan, have taken steps to diversify their supply chains after the 2011 Tohoku earthquake and tsunami, when car factories worldwide ground to a standstill after production of Renesas microcontrollers was hit.

Partly as a result of those efforts, about two-thirds of the chips affected in the latest fire can be produced elsewhere. But Shibata acknowledged that finding alternative facilities to make its chips would be difficult since the industry is already struggling with a lack of spare production capacity at foundries such as Taiwan’s TSMC, the world’s largest contract chipmaker. 

Renesas had been increasing production to address the semiconductor shortage, shifting some of the chips outsourced to TSMC to the manufacturing line that was damaged by the fire. The Taiwanese company has been scrambling to meet a surge in demand after a rebound in car sales coincided with a surging consumer electronics market. 

The chip shortage has already slowed automotive production around the world and threatens to delay output for other forms of electronics, including smartphones. 

The drought in semiconductor parts has been compounded by the extreme weather in the US, which has triggered a shortage of petrochemicals that are used in seats, airbags and dashboards. 

Toyota, one of Renesas’s biggest clients, said on Friday it would close its factory in the Czech Republic for two weeks as disruption to its North American supply chain caused by the cold spell spread to Europe.

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US 10-year Treasury yield tops 1.7% as Fed forecasts reverberate


Long-term US government bonds weakened in early European trading after the Federal Reserve raised its growth and inflation forecasts but stuck to plans to keep short-term interest rates low until at least 2024.

The 10-year Treasury yield, a key benchmark for borrowing costs across global financial markets, rose as much as 0.096 percentage points to 1.738 per cent. It has not held above 1.7 per cent since January 2020, before the market ructions triggered by the coronavirus crisis.

Treasuries that mature in 30 years were also under pressure on Thursday, with the yield rising as much as 0.09 percentage points to 2.51 per cent, the highest level since 2019. Short-term two-year notes were little changed, yielding 0.131 per cent.

The Fed late on Wednesday increased its median projection for growth and inflation in the world’s biggest economy, anticipating that US President Joe Biden’s $1.9tn economic stimulus and a swift rollout of Covid-19 vaccines will boost the outlook.

The Fed maintained a dovish stance at the end of the two-day meeting of its top policymakers, noting the improving outlook while cautioning that a full recovery remained distant, the path ahead was uncertain and the economy still required ultra-easy monetary policy.

“While we welcome these positive developments, no one should be complacent,” Jay Powell, the Fed chair, said during a post-meeting press conference. “At the Fed, we will continue to provide the economy the support that it needs for as long as it takes.” 

Line chart of % showing US 10-year Treasury yield jumps to highest level in more than a year

More members of the Federal Open Market Committee indicated that they expected a rate rise in 2022 or 2023 than had done so at a December meeting, but the median expectation was still for no increase to the federal funds rate until at least 2024.

The combination of more robust inflation, which erodes the appeal of the fixed-income payments bonds provide, with low short-term interest rates was seen by some analysts and investors as negative for medium- and long-term bonds that are more sensitive to the broader economic outlook.

“We believe there is room for Treasury yields to rise further,” said Jay Barry, managing director of interest rate strategy at JPMorgan following the meeting. He said bonds of medium-length duration were particularly vulnerable.

The upgrades to the forecasts from Fed officials were significant. Predictions for growth this year were bumped up to 6.5 per cent, from a December estimate of 4.2 per cent, which would be the fastest economic expansion since 1984. Meanwhile, the unemployment rate is now forecast to fall to 4.5 per cent by the end of the year instead of 5 per cent.

Core personal consumption expenditure inflation, the Fed’s preferred measure, is expected to rise to 2.2 per cent and above the central bank’s 2 per cent target, compared with the smaller rise to 1.8 per cent predicted in December.

Column chart of Quarterly total returns (%) showing Long-term US government bonds in historic sell-off

US government bonds have been under strong selling pressure so far this year. The 10-year benchmark yield began the year at about 0.9 per cent.

Long-term Treasuries, those that mature in 10 years or longer, have dropped more than 14 per cent in price since the start of 2021 as of Wednesday’s close. If the fall is sustained through the end of the month, it would mark the worst quarter on records stretching back to the late 1980s, according to a Bloomberg Barclays index.

Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, said he expected a further increase in long-term rates over short-term ones. “Everyone knows the economy is doing better. That pressure has to go somewhere,” he said.

The most pressing issue for investors across different asset classes is whether the pick-up in bond yields will be enough to derail the stock market. “Our core asset market stance has been to ‘keep the faith’ on cyclical assets,” wrote analysts at Goldman Sachs earlier this week. “The basis for that view has been our belief that our bullish growth forecasts are still not fully reflected in asset prices and that rising rates will not be sufficient to derail that cyclical upgrade. Both elements remain true.”

Danone board ousts Emmanuel Faber as chief and chairman


Danone’s board of directors has decided to replace Emmanuel Faber as chief executive and chairman, bowing to pressure from activist investors and blowing up a two-week-old compromise designed to have him remain as chairman.

After a long board meeting on Sunday night, Danone announced Faber’s departure with immediate effect on Monday, confirming earlier reports in the Financial Times and Le Figaro.

It was a dramatic end to a months-long conflict at the French consumer goods group behind Evian bottled water, Activia yoghurt and Alpro soya milk that has been grappling with a sales slump since the pandemic began. Activist investors attacked Danone for what they cast as its chronic underperformance compared with larger rival Nestlé, and publicly called for Faber’s departure.

Gilles Schnepp, the former chief executive of industrial group Legrand who joined the Danone board in December, was named as chairman and will lead the search for a new chief executive.

Two executives already at the company will “jointly lead the business” while the search is carried out: Véronique Penchienati-Bosetta, who was running international operations, and Shane Grant, the head of North America.

Danone shares rose 4 per cent on Monday morning.

The departure of Faber, who joined the group in 1997 and took over as chief executive in 2014, marks the downfall of one of the most visible advocates in global business for a more responsible capitalism in which companies do not only serve shareholders but also protect the environment, their employees and suppliers.

Danone has espoused a more human, “multi-stakeholder” model of business going back to the 1960s under the leadership of Antoine Riboud, and Faber continued in that tradition.

When Danone shareholders approved a change in the company’s legal status last year to enshrine its social mission, Faber declared they had “toppled the statue of Milton Friedman”. Danone became the first big listed French company to become a so-called enterprise à mission, or purpose-driven company.

Faber also championed the growing environmental, social and governance movement among investors in other ways, such as when the group began reporting “climate adjusted” earnings per share last year and invested heavily in reducing plastic use.

Although the activists campaigning at Danone were careful not to directly attack its sustainability focus, they did argue that the balance between shareholders’ interests and others had been lost under Faber.

The public campaign carried out since January by activist Bluebell Capital and Artisan Partners, a US fund, put Faber and the board under intense pressure to respond to the criticism. More shareholders had indicated in private that they too supported them.

Danone sought to calm the acrimony on March 2 by announcing that it would split the chairman and chief executive roles held by Faber and begin to look for a new CEO. Faber would stay on as chairman, and the board said it continued to back the lay-off and restructuring plan he had advocated to turn round the group.

But Bluebell and Artisan rejected that plan, saying the moves would tie the hands of any new chief executive and allow Faber to keep too much power. “The new changes announced at Danone violate the most basic of corporate governance standards,” wrote Artisan in an open letter to the board.

In the days after the announcement, other shareholders also expressed misgivings, said people familiar with the matter.

Of particular concern to the dissatisfied shareholders was the decision also announced on March 2 that Schnepp would not be the lead independent director, as previously planned, but instead the important oversight position would go to Jean-Michel Severino, a board member since 2011 and close ally of Faber.

Severino held meetings with top shareholders since then, which one person close to the group said “did not go well’ and left some with the impression that he would not be an effective counterweight to Faber.

“The priority of the board is now to transition towards an improved governance” by “accelerating the process to recruit a new CEO,” said Schnepp in a statement.