Nissan CEO Saikawa apologizes to employees, criticizes Ghosn’s power

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TOKYO – Hiroto Saikawa, CEO of Nissan, apologized on Monday in a business address and condemned the deposed chairman Carlos Ghosn because he had accumulated too much power in his own hands.

Saikawa confirmed the commitment of the automaker for its alliance with Renault and Mitsubishi. But Saikawa blamed Ghosn for concentrating too much authority on himself as CEO of all three car manufacturers, people who visited the internal city hall said.

Saikawa was Ghosn's perch – as the chairman of all three car manufacturers and CEO of Renault – an "unequal" position. He said that Ghosn had confused Nissan's brand image with his own persona.

Saikawa said that some people "associate the company with only one face," said one participant about Saikawa's address, paraphrasing his condemnation of the executive status of Ghosn's rock star.

The morning meeting was broadcast live in Japanese and English on televisions in Nissan offices throughout Japan. It was only a few hours before an emergency meeting at Mitsubishi Motors, where the directors were expected to remove Ghosn as chairman.

The downfall of Ghosn – called "Ghosn Shock" in the Japanese media – displaces the future direction of the gigantic Renault-Nissan-Mitsubishi alliance, which has become the world's largest automobile empire, with worldwide sales of 10.6 million vehicles in 2017.

Saikawa surprised the automotive industry last week by accusing Ghosn of financial misconduct and pushing for his resignation. On Monday, he said it was important to restore the stability of the company.

"We did not have the opportunity to talk to the employees, so I hope we can take their concerns away," Saikawa told reporters as they entered Nissan headquarters in Yokohama, just south of Tokyo. Later in the morning, hundreds of Nissan employees crammed into the briefing room of the building on the eighth floor to hear Saikawa's address and ask questions.

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Those who could not come could watch a live relay from their desk.

Brand identity

Saikawa gave a detailed account of the accusations against Ghosn and explained how the Nissan board had voted last week to remove him as chairman, according to those present.

He also blamed Ghosn for taking too much uncontrolled authority.

"He spent most of the time in the concentration of power," said one employee.

Over time, Ghosn's cunning status at Nissan's head became a trademark liability, Saikawa said.

Saikawa "thinks there are enough reasons to see Nissan for its products and technologies," said the employee.

Saikawa said he would also meet his colleagues at Renault and Mitsubishi this week. The staff of the alliance will meet in Amsterdam on Wednesday for a regular leadership meeting. It could be the stage for Nissan's Saikawa's first face-to-face meeting with the Renault counterparts since Ghosn's arrest.

Ghosn and his co-director Greg Kelly of Nissan were arrested on November 19 and are being investigated for alleged underreporting Ghosn's income and misuse of company assets.

During an emergency meeting on November 22nd, the board of Nissan 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, awaiting a vote from the shareholders to remove them. Nissan has not announced when that can take place.

Deferred compensation questions

Nissan accuses Ghosn of "significant" financial misconduct and calls Kelly the "mastermind" behind the scheme, which reportedly has diverted Ghosn's pockets at the company's expense.

Both men are reportedly detained in a detention center in Tokyo.

Since their arrest neither of them has been seen publicly, nor has a public statement been made. But citing unidentified sources, the Japanese media reported on November 25 that both men have denied misconduct.

At the same time, Nissan is preparing to file a damage case against Ghosn in an effort to claim coup funds claiming to have been misappropriated to buy overseas houses for Ghosn, to pay personal expenses and reportedly paying for a fake advice assignment to his sister, Kyodo News Agency. reported.

Nissan also establishes a committee, led by the three independent directors of the board, to study how corporate governance can be improved at the Japanese car manufacturer. The committee will also nominate a new chairman from the existing board. That could happen in the next month.

Ghosn has formed the Franco-Japanese alliance from the very beginning and has slowly weaved his operations and destiny during his 19 years of leadership.

The impending retirement of 64-year-old Ghosn has concentrated the debate on how the alliance could stay together after taking a step back. This has given rise to concerns about losing influence or independence from both parties, in France and Japan. Saikawa is strongly opposed to a complete merger.

Nissan accuses Ghosn of underreporting its income over several years, misuse of business costs and abuse of corporate investment funds.

The generous remuneration of Ghosn

New details of the alleged crime of Ghosn dripped out in the Japanese media. New attention was focused on generous compensations for deferred compensation that Ghosn would have been promised at a later date, such as after retirement.

Nissan arranged approximately 1 billion yen ($ 8.9 million) of deferred compensation paid annually for eight years, accounting for some 8 billion yen ($ 71 million) of unreported compensation.

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The composition of Ghosn's compensation is a combination of cash, stock options and other forms of variable remuneration, including something called stock rights. The latter is a type of bonus that is paid at a later date and is based on the price development over time.

As such, Nissan may not yet have paid those payments, a Nissan officer familiar with the thinking. Yet a company must report such amounts as a future liability.

Mitsubishi meeting

The board of Mitsubishi, which joined the alliance of Renault and Nissan in 2016, would meet Monday afternoon to vote on the removal of Ghosn as chairman.

As with Nissan, Mitsubishi shareholders should still vote on removing Ghosn as a director. Mitsubishi may convene an extraordinary meeting to dismiss him before the next annual shareholders' meeting scheduled for June 2019, a spokesman for the company said.

Nissan holds a controlling stake of 34 percent in the smaller Japanese automaker.

Ghosn became chairman after Nissan took control at the end of 2016 and when president and CEO Osamu left Masuko. Masuko retains his titles as CEO and as representative.

The eight-man board of Mitsubishi includes Ghosn and two other drivers that have been sent by Nissan. Masuko is the only director of Mitsubishi Motors. The board has one director of Mitsubishi Heavy Industries and another of trading company Mitsubishi Corp.

Two independent external directors complete the management of Mitsubishi Motors.

Ghosn retains his position as CEO and chairman of Nissan's alliance partner Renault, although the French automaker has delegated its duties to its second commander, Thierry Bollore, while Ghosn remains in detention in Japan.

Naoto Okamura contributed to this report