OSAKA, Japan—Nine of Toyo Tire & Rubber Co. Ltd.'s top executives have resigned, retired or been demoted, with a number of them returning salary or taking pay cuts in the wake of the firm's ongoing controversy surrounding non-compliant earthquake-proof seismic isolation rubber bearings sold in Japan.
Chairman Akira Nobuki and President Takuji Yamamoto announced their resignation at a June 23 news conference in Japan. Seven other corporate officers or advisers also resigned, retired or were demoted, according to a translated report released by Toyo.
Nobuki's resignation becomes effective July 1, and the firm's report said it will require him to return 50 percent of his pay for the last 12 months of his tenure. Yamamoto will continue to serve as president until the next emergency shareholders meeting when Toyo will appoint a new management team. He will take a 50 percent pay cut for the remainder of his tenure.
The Toyo report said the emergency shareholders meeting will be held in the fall and no later than year end. The firm will look to appoint a chairman from outside the company.
Other executives affected include:
• Tetsuya Kuze, executive corporate officer and representative director, will be demoted to senior corporate officer effective July 1 and take a 30 percent pay cut for six months;
• Kazuyuki Ito, director and senior corporate officer, will resign both positions effective July 1 and take a 30 percent pay cut for three months. A June 25 Toyo press release said he will remain with the company as an adviser;
• Sadao Ichihara will remain a director until the next emergency shareholders meeting and take a 30 percent pay cut for six months. The June 25 release said he will remain a senior corporate officer, group executive officer of the firm's DT Business and general manager of the firm's chemical and industrial products business unit;
• Kenji Nakakura, an adviser, will resign effective July 1, according to the June 25 release, and will return 50 percent of his pay from the last six months according to Toyo's report;
• Haruhiro Shinsho, an adviser, will retire effective July 1 and return 30 percent of his pay from the last 12 months;
• Toshiaki Okazaki, a corporate officer, will retire effective July 1; and
• Gentaro Aoki, an adviser, will retire effective July 1.
The firm said in separate reports released in April and March that a total of 145 buildings were confirmed to have non-compliant earthquake-proof rubber shock absorbers since it began selling them in 1996. Initially the firm said it supplied sub-standard products from July 2004 through February 2015.
The products were certified for quality by Japan's Ministry of Land, Infrastructure Transport and Tourism, but since were found not to have conformed to performance standards.
In its 2015 first quarter financials ending March 31, Toyo said it took a $102 million one-time extraordinary loss to cover estimated costs related to the earthquake scandal, which caused the firm to suffer a net loss of $25.7 million for the quarter.
Toyo said in its first quarter financial report the loss was considered a provision of reserve for product warranties based on an estimate for the cost of repair work and other measures related to the earthquake isolation bearings it produced and sold.
At the time of its first quarter financial report, Toyo said the loss may be greater but it could not make a reasonable calculation.