November 26, 2018 09:03 CET
— UPDATED: Nov. 26 12:52 CET – adds detail
TOKYO — Nissan CEO Hiroto Saikawa apologized to employees in a companywide address today and condemned ousted chairman Carlos Ghosn for amassing too much power in his own hands.
The Nissan chief reaffirmed the Japanese automaker’s commitment to its alliance with Renault and Mitsubishi. But Saikawa blamed his former boss for concentrating too much authority in himself as top man at all three automakers, people attending the internal town hall said.
Saikawa called Ghosn’s perch – as chairman of all three automakers and CEO of Renault – an “unequal” setup and claimed Ghosn had muddled Nissan’s brand image with his own persona.
“He said some people only associate the company with one face,” one attendee said of Saikawa’s address, paraphrasing his condemnation of Ghosn’s rock star executive status.
The morning meeting was broadcast live in Japanese and English to televisions in Nissan offices throughout in Japan. It came just hours ahead of an emergency board meeting at Mitsubishi Motors, where directors removed Ghosn as its chairman as well.
Ghosn’s bombshell downfall – dubbed “Ghosn Shock” in the Japanese media – clouds the future direction of the mammoth Renault-Nissan-Mitsubishi alliance, which has expanded into the world’s biggest auto empire, with global sales of 10.6 million vehicles in 2017.
Saikawa, who stunned the auto industry last week by accusing Ghosn of financial misconduct and pushing for his dismissal, said it was important to restore stability to the company.
“We haven’t had an opportunity to talk to the employees. So first, I hope we will be able to allay their concerns,” Saikawa told reporters while heading into Nissan’s headquarters in Yokohama, just south of Tokyo. Later in the morning, hundreds of Nissan employees crammed into the building’s eighth-floor briefing room to hear Saikawa’s address and ask questions.
Those who could not attend could watch a live relay from their desks.
Saikawa gave a broad-brush explanation of the accusations against Ghosn and explained how the Nissan board had voted last week to remove him as chairman, attendees said.
He also faulted Ghosn for taking on too much unchecked authority.
“He spent maybe the most time on the concentration of power,” one employee said.
Over time, Ghosn’s cult-like status at the head of Nissan became a brand liability, Saikawa said.
“When some people think of Nissan, they only think of one person, but that should not be the case for a brand or a company,” one attendee paraphrased Saikawa as saying.
“He thinks there are plenty of reasons to see Nissan for its products and technologies.”
Another employee, an engineer who watched from his desk, said Saikawa did not elaborate on details of the accusations against Ghosn because of the ongoing investigation.
According to the employee, Saikawa said that he valued the alliance and added that Ghosn’s tight grip on all three companies was bad for corporate governance.
“At my level, I honestly didn’t know what was really going on at the very top of the company, but it is true that Ghosn had supreme power,” the man said.
Saikawa said he would also meet his counterparts at Renault and Mitsubishi this week to talk about the unexpected turn of events. Alliance executives were scheduled to meet in Amsterdam for a regular leadership meeting. It may set the stage for Nissan’s Saikawa’s first face-to-face meeting the Renault counterparts since last week’s shocker.
Ghosn and fellow Nissan director Greg Kelly were arrested Nov. 19 and are under investigation for allegedly under-reporting Ghosn’s income and misusing company assets.
At a Nov. 22 emergency meeting, Nissan’s board removed Ghosn as chairman and stripped both Ghosn and Kelly of their status as representative directors with special rights to legally represent the company in business transactions. Both men remain directors on the board, pending a shareholder vote to remove them. Nissan has not announced when that may take place.
The board of Mitsubishi, which entered the Renault-Nissan alliance in 2016, met Monday afternoon and also voted to remove Ghosn as chair. CEO Osamu Masuko will become temporary chairman until a shareholders’ meeting is held, the automaker said.
As with Nissan, Mitsubishi shareholders would still need to vote on removing Ghosn as a director. Mitsubishi may call an extraordinary meeting in order to dismiss him before the next annual shareholders meeting, which is scheduled for June 2019, a company spokesman said.
Nissan owns a controlling 34 percent stake in the smaller Japanese automaker.
Ghosn became chairman of Mitsubishi after Nissan took control in late 2016, displacing Masuko who was then chairman and CEO. Masuko remained CEO and representative director at the time.
Mitsubishi’s eight-member board includes Ghosn and two other directors dispatched from Nissan. Masuko is its only director from Mitsubishi Motors. The board has one director from Mitsubishi Heavy Industries and another from trading house Mitsubishi Corp.
Two independent outside directors round out the Mitsubishi Motors board.
Ghosn retains his position as CEO and chairman of Nissan’s alliance partner Renault, although the French automaker has been delegated his duties to second-in-command Thierry Bollore and board director Philippe Lagayette, while Ghosn remains in detention in Japan.
Deferred compensation questions
Nissan accuses Ghosn of “significant” financial misconduct and calls Kelly the “mastermind” behind the scheme, which allegedly lined Ghosn’s pockets at the company’s expense.
Both men are reportedly being held in a Tokyo detention center.
Neither has been seen in public since their arrest nor made a public statement. But citing unidentified sources, Japanese media reported Nov. 25 that both men have denied wrongdoing.
At the same time, Nissan is preparing to file a damages suit against Ghosn in an attempt to coup funds it claims were misappropriated to buy overseas homes for Ghosn, float personal expenses and allegedly pay for a bogus advisory job handed his sister, Kyodo News Agency reported.
Nissan is also setting up a committee led by the board’s three independent directors to study how to improve corporate governance at the Japanese automaker. The committee will also nominate a new chairman from the existing board. That could happen as early as next month.
Ghosn has shaped the French-Japanese juggernaut from its very inception and has slowly intertwined their operations and destinies during his 19 years in leadership.
The looming retirement of the 64-year-old Ghosn has focused debate on how the alliance might stay together after he steps back. That has spurred concern on both sides, in France and in Japan, about losing influence or independence. Saikawa, for one, is adamantly opposed to a full merger.
Nissan accuses Ghosn of under-reporting his income over multiple years, abusing company expenses and misusing corporate investment funds.
Even as Mitsubishi’s board met to dismiss Ghosn, new details of his alleged malfeasance were trickling out in the Japanese media. Fresh focus turned to generous allowances for deferred compensation allegedly promised Ghosn at a later date, such as after retirement.
Nissan arranged to have about 1 billion yen ($8.9 million) of deferred compensation paid annually over eight years, totaling some 8 billion yen ($71 million) in unreported compensation.
The makeup of Ghosn’s compensation is a mix of cash, stock options and other forms of variable compensation including something called stock appreciation rights. The latter is a kind of bonus paid at a later date that is based on share price performance over time.
As such, Nissan may not yet have disbursed those payments, a Nissan officer familiar with the thinking said. But even so, a company is required to report such amounts as a future liability.
Naoto Okamura contributed to this report
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