Nidec Selects Five Executive Vice Presidents

Nidec 6594 announced that its nomination committee has appointed five executive vice presidents effective from April 1, as part of its succession plan. One of the five executive vice presidents will be selected to serve as president of the company effective April 2024, and the term of the president is expected to be four years. After the term, the president will be appointed as chairman for another four years. Shigenobu Nagamori, the 78-year-old founder and chairman of the company, will become a representative of the board of directors in April 2024. Since it has taken Nidec more than 10 years to select a successor, the succession issue has been a risk factor for the company for a long time. Therefore, the path laid out for the selection of a new president should help alleviate some of the market’s concerns. However, the previous two presidents were forced to step down within three years, and thus it remains unclear whether the new president will be able to meet chairman Nagamori’s strict requirements. Although we believe that Nidec’s shares are undervalued, stability in the management structure is necessary for the shares to be rerated, in our view.

The five executive vice presidents were selected by the nominating committee from a pool of candidates recommended by the company. On one hand, two of them are currently presidents of group companies, indicating that their track records of improving the fundamentals of their respective companies were highly valued. In addition, two of them have strong backgrounds in technology and manufacturing. On the other hand, three of them have banking backgrounds, and the other two have been with the company for only a short time, so there is a concern that their lack of understanding of Nidec’s core business, motors, may negatively affect decision-making on mergers and acquisitions, which have supported Nidec’s high growth. Nagamori plans to gradually reduce his engagement in management but may continue to be involved in M&A.