Nomura cuts CEO pay after ex-worker charged with theft

CEO Kentaro Okuda, who is also president of Nomura’s domestic securities unit, will return 30% of his salary for three months, the company said in a statement on Tuesday. Other executives will take similar reductions. 

The incident in Hiroshima in western Japan is one of two scandals that have shaken Nomura lately, blighting the firm’s reputation at a time when profit is rebounding. 

“We would like to deeply apologize to the victims as well as many other people involved for the great inconvenience and concerns caused,” Okuda said at a news briefing in Tokyo, as he and three other top managers bowed deeply in unison. “We are truly sorry.”

When asked whether there cultural issues behind the Hiroshima case, Okuda didn’t rule it out, saying he is taking it seriously.

Prosecutors charged the 29-year-old former worker last month, alleging that he drugged an elderly customer and the person’s spouse, stealing cash from their home and setting it on fire. The suspect was working for Nomura’s wealth management division at the time of the incident in July and has since been dismissed. 

Nomura announced a range of measures to enable early detection of misconduct by employees. Among them are strengthening supervision of visits to clients’ homes and seeking wider feedback on workers, including from colleagues. The company also vowed to improve its recruitment selection process and carry out ethics training.

Last month, the firm said it is tightening rules on visits to clients’ homes, with employees needing prior approval to consult customers.

It’s the second time Okuda has taken a pay cut in recent weeks. In late October, he offered to return 20% of his pay for two months after Japan’s financial regulator fined Nomura for manipulating the government bond futures market. Clients decided to take bond trading and underwriting business to rivals after the revelations, though some have since returned to Nomura. 

Okuda’s compensation rose 31% to ¥506 million ($3.4 million) in the year ended March, which was a record high for a Nomura CEO.

Earlier Tuesday, Okuda told an annual forum of the firm’s institutional investors that he was sorry about the Hiroshima incident, while pledging to take remedial steps. Some investors at the gathering shook off the recent scandals, saying they think things will improve from now on. One said what’s important is to take measures to prevent a recurrence.

Shares of Nomura have been relatively unscathed throughout the scandals, as buoyant financial markets fueled profit growth. The stock climbed 1.5% on Tuesday, taking this year’s advance to 47%. 

Still, it remains to be seen whether the Hiroshima case affects Nomura’s lucrative wealth management operations at a time when Japanese individuals have shown increased willingness to invest their savings. Consultations with clients in their homes is a common practice in Japan. 

The Financial Services Agency had urged Nomura to examine the cause of the incident and come up with measures to prevent similar cases, Bloomberg reported last month. 

Nomura said the former employee joined Nomura’s domestic securities unit as a new graduate in 2018. He provided asset management advice to individual and corporate clients at the Hiroshima branch. 

On Aug. 2, he told his branch manager that police suspected him of arson in relation to a fire at a client’s home and that he stole money from them. Nomura said it learned of the incident from this report and fully cooperated with the police investigation. 

The firm immediately began contacting the former employee’s clients and began a probe into other possible incidents, it said. It dismissed the employee on Aug. 4.