Nissan Motor Co. Chief Executive Hiroto Saikawa speaks during a press conference at its Global Headquarters in Yokohama, near Tokyo Tuesday, May 14, 2019. Japanese automaker Nissan, reeling from the arrest of its former Chairman Carlos Ghosn, reported Tuesday that annual profit nose-dived to less than half of what it earned the previous year, and forecast even dimmer results going forward.(AP Photo/Koji Sasahara)
ASSOCIATED PRESS
Japanese regulators have proposed fining Nissan Motor Co. up to 4 billion yen, or $37 million, for under-reporting former CEO Carlos Ghosn’s compensation.
The Securities and Exchange Surveillance Commission is expected to recommend the fine on the grounds that the failure to report all forms of Ghosn’s pay had a significant negative impact on investor decisions about the automaker, according to Reuters.
Japanese authorities arrested Ghosn in Tokyo last November on charges that he enriched himself at the company’s expense by about $5 million, and that his compensation was under-reported by about 9.1 billion yen, or $84.7 million over almost a decade.
Ghosn had denied he did anything improper and that he is a victim of corporate back-stabbing.
Before levying any fine, the SESC must complete an investigation that is expected to begin in the next few days when Nissan files its latest financial statements.
Nissan could reduce the fine to about 2.4 billion yen, or $22.3 million, if it files those statement before the investigation starts and acknowledges previous statements were inaccurate.
Tuesday Nissan shareholders approved measures aimed at repairing its strained alliance with Renault, which has been under pressure since Ghosn’s initial arrest. Renault owns 43% of Nissan, but until Tuesday the Japanese automaker resisted giving more power to its French partner.
The alliance nearly unraveled in late May when Fiat Chrysler Automobiles proposed a merger with Renault in which the two companies would each own 50% of a new company. But FCA withdrew the proposal earlier this month after Renault officials delayed a vote on it until they received more guidance from the French government, which owns 15% of Renault. That stake would be been cut in half.
Nissan also resisted FCA’s proposed merger.
So Nissan and Renault are trying to work out their differences.
In Tuesday’s raucous meeting in Yokohama, shareholders approved a governance structure that would improve shareholder oversight and prevent one individual, such as Ghosn, from becoming so dominant that he faced little or no accountability.
Under the new arrangement Renault would have greater representation on certain board of director committees. There also will be more careful review of executive compensation and other practices.
Nissan CEO Hiroto Saikawa was re-elected to the company’s board, but he acknowledged the value of the Renault-Nissan alliance and said he would work to make it stronger.
Saikawa apologized to shareholders for the bickering over Ghosn.
“We were a bit slow in taking actions,” he said. “We are intensifying our efforts to catch up as soon as possible.”
The apology was not enough for some shareholders who blame Saikawa for part of the chaos surrounding Ghosn.
There are other investors who remain angry at Renault and the French government, which they say has resisted Nissan’s efforts to improve its own oversight practices.
One shareholder accused Renault Chairman Jean-Dominique Senard, who attended the meeting, of trying to sell out Nissan to the French government.
Senard apologized to Nissan shareholders, but defended his effort to increase Renault’s presence on Nissan’s board.
Underlying the ongoing management conflict is Nissan’s poor financial performance in fiscal year 2018, during which operating profit fell by about 45%. Nissan has told investors that profit could fall by more than 25% for the current fiscal year ending March 31, 2020.
