Nissan CEO Hiroto Saikawa forced out over inflated bonuses scandal

Tokyo  — Nissan Motor CEO Hiroto Saikawa will step down over a scandal involving inflated stock-linked bonuses, deepening the turmoil that’s enveloped the Japanese automaker since the arrest of former chair Carlos Ghosn.

Saikawa, Ghosn’s handpicked successor as CEO, will exit on September  16 after Nissan’s board voted unanimously to ask him to resign. He will be replaced on an acting basis by COO Yasuhiro Yamauchi. A replacement will be named by the end of October, the carmaker said in a late-night news conference in Yokohama, near Tokyo, on Monday.

Pressure on Saikawa intensified following reports last week that he and other Nissan executives were paid more than they were entitled to, dealing a final blow to the CEO who had spent the period since Ghosn’s arrest in November trying to right the carmaker. Amid the fallout from losing a leader who loomed large over the company for two decades, Nissan has also been grappling with decade-low profit  and job cuts as car sales slow globally.

“I should have clarified, ironed out everything and handed my baton over to a successor, but I couldn’t finish everything,” Saikawa said late Monday.

The Nissan lifer, 65, betrayed few emotions as he sat alone, taking questions after the board had finished explaining his departure. “I wanted to set things to right and resign.”

Ten candidates

The board’s nomination committee will select the next CEO from a pool of about 10 candidates, said lead director Masakazu Toyoda. They include non-Japanese, women and people from Renault SA, Nissan’s biggest shareholder and partner in a global carmaking alliance with Mitsubishi Motors.

Renault declined to comment on Saikawa’s resignation.

An internal investigation by Nissan found Saikawa had been overpaid by 90-million yen ($841,000) via stock appreciation rights, including tax adjustments. Under the plan, directors receive a bonus if the company’s share price performs better than a set target. Other executives were also said to have received excess pay.

Although Saikawa’s leadership has come under scrutiny since Ghosn’s arrest for financial crimes, he was reappointed as CEO by Nissan’s shareholders earlier in 2019. In June, Saikawa said that he should be held responsible for the instability unleashed by Ghosn’s downfall, and said he wanted the company to accelerate the search for his replacement.

The issue over excess pay first came to light after Greg Kelly, a former senior executive who was arrested along with Ghosn in November, accused Saikawa in a magazine interview of improperly receiving compensation.

Nissan does not consider the excess payment to have violated any laws, and Saikawa has denied he ordered the payments, saying the matter was mishandled by staff.

It is an ironic turn of events for Saikawa, who went from being Ghosn’s protege to the public face of the accusations against him. Nissan’s CEO appeared before the world’s media just hours after the former chair’s November 19 arrest to denounce his behaviour, describing his “indignation” and “despair” at the conduct of his former boss.

Like Saikawa now, some of the allegations against Ghosn related to pay. The former chair is out on bail, due to face trial in Tokyo in 2020 on charges he failed to disclose compensation from Nissan, passed on trading losses to the carmaker and redirected company money into his own accounts. Ghosn denies all the allegations.

Rocky tenure

Saikawa’s tenure as the CEO of one of Japan’s carmaking icons was marked by a series of missteps.

Just months after he took charge in April, 2017, Saikawa was criticised for not having bowed enough when apologising for having used uncertified workers to sign off completed cars. Calls for him to resign by Japanese media were amplified after he did not show up at a press conference to address the falsification of emissions data.

The deterioration in relations between Nissan and Renault since Ghosn’s arrest and an aborted merger with Fiat Chrysler Automobiles also added to pressure on Saikawa. Long-held tensions between the two carmakers over control of their alliance broke into the open after Ghosn was arrested, and worsened when Renault’s new chair, Jean-Dominique Senard, pursued the Fiat deal without telling the Japanese company.

French pressure

Saikawa started at Nissan after graduating from the University of Tokyo in 1977. Much of his career was spent in the purchasing department, a critical function in any company but especially so for a carmaker, since procurement can account for as much as two-thirds of the cost of sales.

He served on the board of Renault, Nissan’s biggest shareholder, between 2006 and 2016, during which the alliance came under pressure from the French state, which had increased its stake in Renault without informing Ghosn.

Saikawa led Nissan’s negotiations with Renault and the French government in 2015 to address an imbalance that left the Japanese carmaker with no voting rights for its stake in the French company. A crisis was averted after the French government pledged not to interfere in Nissan’s governance.

Since Ghosn’s arrest and removal as chair, Saikawa has led a companywide overhaul of Nissan’s corporate governance, bringing in more outside directors. He continued to lead negotiations on rebalancing the capital ties with Renault before his resignation.

Bloomberg