UPDATE 2-Shin-Etsu chief Kanagawa to step aside after 20 yrs

* Kanagawa to become chairman in June after 20 yr run as CEO

* EVP Mori to succeed Kanagawa, take lead in decision-making

* Kanagawa showed strength of one-man management -investor

* Profits surged under Kanagawa, market value up four-fold

* Shares close down 2.2 pct after news of reshuffle

By Sachi Izumi and Nobuhiro Kubo

TOKYO, May 20 (BestGrowthStock) – Chihiro Kanagawa, the 84-year old
chief executive of Shin-Etsu Chemical and one of Japan’s most
respected managers, will step aside and become chairman after two
decades at the helm of the country’s most valuable chemicals firm.

Shin-Etsu (4063.T: ), the world’s top producer of silicon
wafers used to make semiconductors and the plastic PVC, said
Kanagawa would be replaced as president and CEO by Executive Vice
President Shunzo Mori, 72, after a shareholder meeting in June.

The possible resignation of Kanagawa has been the subject of
market chatter for years. Among investors there was generally
thought to be a “Kanagawa premium” supporting the stock price,
which closed down 2.2 percent on Thursday after the news.

Shin-Etsu’s market value has increased about four-fold to $23
billion since Kanagawa took the top post in 1990. Sales have more
than doubled and the company delivered 15 years of straight
profit growth before the economic downturn in 2009.

“He showed the good side of one-man management, which is to
be able to make decisions quickly,” said Fujio Ando, senior
managing director at Chibagin Asset Management, comparing him to
fellow octogenarian Osamu Suzuki, head of Suzuki Motor (7269.T: ).

“These people are quite rare among Japanese companies.”

Kanagawa is known for his ability to read market trends and
take calculated risks. Shin-Etsu was the first to begin mass
production of advanced 300-millimetre silicon wafers soon after
the information technology bubble popped in 2001, when many
analysts questioned if there would be sufficient demand.

“I don’t have as much stamina and will power as I used to
have,” Kanagawa told a news conference, adding that he would
defer to Mori on major decisions, even though he will still hold
the right of representation.

“I will support the company as much as I can (as chairman).
If our opinions differ, it is the new president that will make a
decision. We absolutely must avoid a dual power structure.”

Shin-Etsu competes with Sumco Corp (3436.T: ) in silicon wafers
and the likes of Taiwan’s Formosa Plastics (1301.TW: ) and
Belgium’s Solvay (SOLB.BR: ) in polyvinyl chloride (PVC), a plastic
used widely in construction.

Foreign investors hold about a third of Shin-Etsu’s stock,
relatively high for a chemicals company.

One of the reasons is its solid financial standing. Shin-Etsu
boasts a very high shareholders’ equity ratio of 81 percent and
is effectively debt-free.

But it has been stung by the global economic slowdown. The
company has posted two straight years of falling profits and said
in April that it had decided not to issue a forecast for the
current year to March 2011 amid a murky outlook for demand.

Stock Market

(Writing by Sachi Izumi; Editing by Joseph Radford)

UPDATE 2-Shin-Etsu chief Kanagawa to step aside after 20 yrs