Post-Ghosn era: Nissan probe finds CEO Saikawa, other executives overpaid

Nissan Chief Executive Hiroto Saikawa apologized and vowed to return any improperly paid funds. (AP)
Updated 05 September 2019

Post-Ghosn era: Nissan probe finds CEO Saikawa, other executives overpaid

  • The improper payments were disclosed on Wednesday at a meeting of Nissan’s audit committee
  • Confidence in CEO Hiroto Saikawa had already been shaken by accusations he was too close to ousted chairman Carlos Ghosn

TOKYO: Nissan was embroiled in another scandal over executive pay on Thursday after Chief Executive Hiroto Saikawa admitted to being overpaid in violation of internal procedures under a scheme designed by ousted Chairman Carlos Ghosn.
An internal investigation found that Saikawa and other executives had received improper compensation, a source with knowledge of the matter told Reuters, raising doubts about Saikawa’s pledge to improve governance in the wake of Ghosn’s arrest last year for alleged financial misconduct.
Saikawa apologized and vowed to return any improperly paid funds as he admitted to Japanese reporters earlier on Thursday that he had wrongly received stock-related compensation under “a scheme of the Ghosn era.”
“I am deeply sorry for causing concern,” Saikawa said, according to Jiji Press.
In other comments reported by Kyodo news, Saikawa denied any direct role in the execution of the rights scheme and said he thought “proper procedures” had been taken.
The improper payments, including tens of millions of yen Saikawa received through a stock appreciation rights (SAR) scheme, were disclosed on Wednesday at a meeting of Nissan’s audit committee, said the source who declined to be identified because the information is not public.
Disciplinary action regarding the issue would be discussed at an upcoming board meeting, the source added.
Nissan said in a statement that the findings from its probe including issues related to the share appreciation rights would be submitted to its board on Sept. 9.

The company has been trying to strengthen governance, slash costs and boost flagging profitability amid persistent allegations of financial misconduct stemming from Ghosn’s 20-year reign at Japan’s second-biggest automaker.
Ghosn is awaiting trial in Japan over charges including enriching himself at a cost of $5 million to Nissan. Kyodo reported that proceedings could start as early as March.
He denies any wrongdoing and says he is the victim of a boardroom coup.
Confidence in Saikawa had already been shaken by accusations he was too close to Ghosn, whose arrest in November rocked the global auto industry and exposed tensions in the automaking partnership between Nissan and Renault SA.
The company launched its internal investigation after Japanese magazine Bungei Shunju in June published accusations by former director Greg Kelly that Saikawa was granted an exception in 2013 to reschedule a stock-linked bonus that bumped up the payout by ¥47 million ($445,962).
Like Ghosn, Kelly is awaiting trial on charges of financial misconduct.
The latest compensation issue could exacerbate tensions with top shareholder Renault, after a failed attempt by the French automaker to secure a full merger with Nissan and to combine Renault with Fiat Chrysler (FCA). Saikawa has opposed both plans.
“Saikawa should resign once the misconduct is formally reported to the board,” Nobuo Gohara, a lawyer who heads Gohara Compliance and Law Office, which is not involved in the Ghosn case, wrote in a blog on his website.
The CEO was re-appointed by shareholders with the lowest approval rating among the 11 directors in June.


Blame game as wheels come off India’s auto sector

Updated 16 September 2019

Blame game as wheels come off India’s auto sector

NEW DELHI: When India’s Finance Minister Nirmala Sitharaman claimed that a preference by millennials for ride-hailing apps was contributing to a painful slump in car sales, it sparked an online backlash from furious youngsters.

They started a campaign using ironic hashtags such as #BoycottMillennials and #SayItLikeNirmalaTai last week to push back against older generations blaming them for today’s problems in society.

While data shows firms such as Uber and Ola are popular with younger consumers more comfortable with shared mobility and digital trends, analysts say the auto industry’s problems run deeper than that — and it is facing more serious bumps in the road.

With a population of 1.3 billion people, India is the world’s fourth-largest car market and one where owning a vehicle is as much a status symbol as a means of transport.

But the country’s once-booming auto sector — seen as an important barometer of overall economic health — is in the slow lane, with sales slumping for the 10th-straight month in August.

“The minimum (priced) car that you can get nowadays starts from six to seven lakhs ($8,500 — $9,800),” university student Somya Saluja told AFP.

“So it’s much easier to pool-in rather than to buy a new car.”

Even India’s richest banker, Uday Kotak, recently said that his son was more comfortable using ride-sharing apps than owning a car.

Uber and Ola reportedly facilitate some 3.65 million daily rides.

Still, Avanteum Advisers managing partner VG Ramakrishnan told AFP the key reason for the drop in car purchases was economic.

“I think the slowdown is primarily because consumer confidence is low and income growth has really been impacted in the last couple of years,” he told AFP.

India’s economic growth slowed for the fifth-straight quarter in April-June to reach its weakest pace in five years.

Banks are also more reluctant to lend owing to a liquidity crunch caused by the near-collapse a year ago of IL&FS, one of India’s biggest shadow banks — finance houses responsible for significant consumer lending.

There are also extra production costs caused by new rules requiring cars to be compliant with emissions and safety standards, while a 28 percent goods and services tax (GST) introduced in 2017 has dampened demand, analysts said.

“Cars are increasingly becoming unaffordable now because of so many taxes,” Karvy Stock Broking auto analyst Mahesh Bendre told AFP.

“To put things in perspective, if you buy a car in India, at least 40-45 percent of costs go to the government in terms of taxes and registration charges and so on.”

A year ago, India displaced Germany to become the world’s fourth biggest car market, having clocked up annual sales growth above seven percent for several years.

But the promising growth ride is screeching to a halt, with passenger car sales tumbling this year, including a 41 percent drop last month — the worst since records began more than 20 years ago.

Aside from passenger cars, sales of commercial vehicles, motorcycles and scooters have also been hammered.

With the industry — a major employer in India — contributing more than seven percent to total GDP and almost half of manufacturing GDP, the potential fallout from an extended slowdown is sending shockwaves through the economy.

Manufacturers are reducing production and cutting jobs, which is also affecting related industries such as auto component manufacturing and at dealerships, totaling about seven percent of India’s total workforce, Bendre said.