By Olympus Corp shares fell over 7% on Monday, marking the steepest intraday decline in nearly three months, following the announcement that CEO Stefan Kaufmann had resigned from all roles effective immediately.
Kaufmann resigned following allegations of illegal drug purchases, according to reports.
Olympus, once recognized for its cameras and imaging technology before shifting to medical equipment like endoscopes, declined further comment, citing an ongoing investigation.
Japanese police are reportedly conducting their inquiry, as reported by Kyodo News.
Kaufmann, a German national who took on the CEO role in April last year, was focused on expanding Olympus’s medical equipment division, succeeding Yasuo Takeuchi, who had managed the firm through extensive asset sales.
Takeuchi will temporarily resume CEO responsibilities, Olympus confirmed.
“Upon receiving allegations of Mr. Kaufmann’s involvement in illegal drug purchases, Olympus, along with external legal counsel, promptly investigated,” the company stated.
“The Board of Directors unanimously concluded that Mr. Kaufmann likely acted against our global code of conduct, core values, and corporate culture,” the statement added.
Olympus stated that Kaufmann, 56, was asked to step down and accepted.
The 7% slide marks Olympus’s largest single-day drop in nearly three months.
Despite this, Olympus shares have surged 35% over the past year, significantly outperforming the Nikkei 225 index’s 24% gain.
The details of the allegations surrounding Kaufmann, one of the few foreign executives leading a major Japanese company, remain limited.
Japan enforces strict regulations on drug use and import, illustrated by a 2015 case in which a Toyota executive was arrested over oxycodone importation.
Olympus has faced corporate scandals in the past. Thirteen years ago, its first foreign CEO, Michael Woodford, exposed a major accounting fraud linked to overpayment in acquisitions, which had concealed losses.
Shortly after, Woodford was dismissed and lost a bid to regain company control.
In August, Olympus lowered its full-year operating income forecast due to growth challenges in recent years.
Citigroup analysts stated that while the situation was unfortunate, Olympus handled it appropriately. They added that the company’s nominating committee is exploring options for a new CEO, with Takeuchi—a leader of the Transform Olympus initiative—considered a strong choice.
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