YOKOHAMA, Japan — Nissan has been handed a list of proposed reforms aimed at eliminating the concentration of power and alleged abuse of privilege that critics say spiraled out of control under former Chairman Carlos Ghosn and triggered the carmaker’s current governance crisis.
The recommendations came Wednesday in the final report of a special committee CEO Hiroto Saikawa set up in December to examine ways of improving corporate oversight.
The day also marked the 20th anniversary of the Franco-Japanese alliance Ghosn spent the last two decades building into the world’s biggest auto group. But the carmakers put milestone festivities on temporary hold as they waited for word on mending Nissan’s woes.
The seven-person Special Committee for Improving Governance proposed a sweeping overhaul that includes creating separate committees to handle everything from corporate auditing to executive remuneration and nomination. The goal is to avert a centralization of power in a single executive and to stamp out conflicts of interest with Nissan’s partners Renault and Mitsubishi.
The committee recommended abolishing the office of company chairman and replacing it with a chairman of the board of directors whose task will be primarily to run its meetings.
The committee was tasked with studying what triggered the scandal that led to the Nov. 19 arrest of Ghosn on allegations of financial misconduct while leading Nissan Motor Co. It has been looking at everything from director compensation to the overall governing structure.
“The management pursued private benefits and therefore it is fundamentally different from past misconduct by the management of listed companies [accounting fraud and illegitimate accounting] who had the excuse of having acted ‘for the company,’” the committee wrote in its report. “Ghosn made the certain administrative departments which would be able to discover management misconduct opaque by concentrating authority.
“The checks and balances functions of the certain departments did not necessarily function effectively with respect to Mr. Ghosn’s demands for his personal gain,” the report said.
Critics, including former protege Saikawa, say Ghosn’s unprecedented role as chairman of Renault, Nissan and Mitsubishi enabled him to perpetuate questionable practices unchecked.
The panel presented its ideas for preventing a repeat to Nissan’s board of directors earlier in the day, then held an evening press conference to publicly explain them.
Nissan’s board will now consider the proposals. It is expected to vote on those that can be adopted in a form the board finds acceptable, a Nissan official said. Some of the proposals may also require shareholder approval at the company’s annual shareholder meeting in June.
The reform committee has three external directors from Nissan — Masakazu Toyoda, Keiko Ihara and Jean-Baptiste Duzan — and four third-party members.
Regarding the potential flashpoint issue of appointing a new Nissan chairman to replace Ghosn, the committee essentially punted. It recommended that the position remain vacant.
Instead, Nissan said earlier this month that appointed Renault Chairman Jean-Dominique Senard was expected to take the role of vice chairman at Nissan.
The chairmanship of Nissan was a bone of contention between Renault and Nissan, which are bound together in a complicated crossholding that gives Renault a controlling 43.4 percent stake in its Japanese partner. Renault had wanted to appoint Nissan’s chairman, but Nissan resisted.
Senard demurred on the matter, helping defuse tension.
Helping the rapprochement was an agreement earlier this month that Renault, Nissan and the alliance’s junior partner Mitsubishi would create a new consensus-based governing board to replace the one-man, top-down approach exercised by Ghosn.
On the newly created four-member Alliance Operational Board, each company will be represented by its CEO, while Renault gets double representation with Senard.
