Nissan Widens Boardroom Powers in Wake of Ghosn Scandal
Ghosn had unusual degree of control over his own compensation.
(Bloomberg) -- Nissan Motor Co.’s board took on expanded powers after the arrest of former Chairman Carlos Ghosn for alleged financial improprieties revealed gaps in corporate governance.
The board widened the scope of decisions that require its approval and decided on an interim process to set compensation for directors and executives, according to a statement Thursday. Nissan has come under fire for internal rules that provided little oversight over Ghosn, a globetrotting business icon who once led a rescue of the automaker, in directing his own pay.
Chief Executive Officer Hiroto Saikawa, a former Ghosn protege, has pledged to address corporate governance shortcomings that ensnared the company in the scandal involving the former chairman, who was accused of under-reporting his income. The Japanese carmaker is rushing to regain credibility as questions swirl over its relationship with French partner Renault SA and the future of their automotive alliance.
Nissan said the decision on who decides compensation would remain in effect until a committee on improving governance hands down its proposals. The company also updated its corporate governance code last month to clarify its policy on cross-shareholdings, which has direct bearing on its partnership with Renault.
Pivotal Roles
The board “re-emphasized its commitment to its alliance partnership with Renault and Mitsubishi Motors,” according to the statement.
Ghosn held pivotal roles in Japan and France as chairman of Nissan and chief of Renault, as well as head of the alliance that binds together both carmakers. Nissan, where allegations of wrongdoing surfaced, moved swiftly to remove him from his post after his arrest on Nov. 19, while Renault nominally kept him in place as it awaits more evidence of misconduct.
Renault’s board, meeting Thursday, won’t make any decision on Ghosn’s role at the carmaker, Agence-France Presse reported.
Court Appearance
Ghosn has disputed the allegations, though prosecutors in Japan have doubled down, re-arresting the executive last month and bringing new accusations that range from asking Nissan to backstop investment losses to misusing company funds.
In a court appearance Tuesday, Ghosn said that he had been wrongly accused and unfairly detained, calling the allegations “meritless and unsubstantiated.” The following day, he lost an appeal against his continuing detention, diminishing the prospects of an early release on bail.
His arrest came after a months-long investigation by Nissan into his conduct, a probe that was kept from its French partner. If proven, each of Ghosn’s alleged offenses may carry a sentence of as much as 10 years, prosecutors have said.
Renault is the largest shareholder in Nissan and the Asian company in return is the second-largest investor in Renault after the French state.
--With assistance from Ania Nussbaum.
To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly
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