Amid shareholder shouts, Saikawa hangs on

YOKOHAMA, Japan — A raucous shareholder showdown, punctuated by heckling, nationalist outbursts and cries of betrayal, underscored the chaotic new reality of Hiroto Saikawa's Nissan Motor Co.

The embattled CEO kept his job following the highly anticipated annual shareholder meeting last week, the automaker's first since the arrest and removal of its influential long- serving boss, Carlos Ghosn, in November.

Saikawa staved off a shareholder motion to fire him. And he was first to highlight the monumental balancing act that he faces in Nissan's post-Ghosn era.

Saikawa's challenges are formidable by any measure. He said he must:

• Revive an annual operating profit that just plunged 45 percent to its lowest level in 11 years.
• Salvage frayed relations with Renault that have devolved to their worst ever.
• Fully implement sweeping corporate governance reforms.

Fixing Nissan's struggling U.S. business is the linchpin to the first item, Saikawa told shareholders. But he said reigniting Nissan profits will take another two or three years.

Also unclear after last week's meeting was whether the 65-year-old CEO would even stick around that long.

Saikawa repeatedly hinted to shareholders that his focus will turn to picking a successor as part of a next-generation leadership team. He wants a new nomination committee, created as part of the corporate reforms that shareholders ratified last week, to speed that transition.

"We need to think about the future of the company and succession plan," Saikawa said. "I want the committee to accelerate preparation so we can hand over to the next generation of leaders."

The comment signaled that the CEO is eyeing the exit, having won shareholder support for the corporate governance reforms meant to improve transparency and oversight. The reforms came as a response to the arrest of Ghosn on allegations of financial improprieties while running Nissan — accusations that Ghosn denies.

A new board created as part of the reforms has a majority of independent directors, while three committees were created to handle executive nominations, executive compensation and corporate auditing.

Saikawa said the changes were necessary to avoid the concentration of power that critics say happened under Ghosn and opened the door to the allegations against him.

But plenty of other challenges remain, Saikawa made clear, starting with his need to soothe and smooth Nissan's fractured relations with its 20-year alliance partner, Renault.

During the three-and-a-half-hour meeting, convened not far from Nissan's global headquarters, angry shareholders hurled invective and suspicion at the French carmaker and its chairman, Jean-Dominique Senard, who shared the stage and afterward was appointed Nissan's vice chairman.

During an audience question- and-answer period, some shareholders voiced opposition to further integration with Renault, while others took issue with Renault's consideration of a merger with Fiat Chrysler Automobiles. One attendee urged Saikawa not to sell out Nissan to a foreign company.

When one shareholder, a former Nissan employee, expressed thanks to Ghosn for reviving the company when it teetered on the brink of bankruptcy in 1999, another shouted, "Shut up!"

Senard, who took the helm at Renault in January after Ghosn was dismissed as chairman there, conceded to the crowd that he found the alliance in a "much worse state than I thought."

Saikawa tried to walk a fine line between defending Nissan's independence and supporting the notion that Renault and Nissan needed their partnership to stay competitive on the global stage.

"We have to put the alliance in a form that is sustainable," Saikawa said, while adding that he doesn't "simply conclude that integration is the best" solution for going forward.

Saikawa also cautioned that the unequal cross-holdings between the two companies could become a source of instability in the relationship.

Renault has a controlling 43 percent stake in Nissan, while Nissan has a 15 percent stake in Renault, with no voting rights.

Saikawa said it was important to keep talking with Renault about the alliance's future.

"If it is necessary to put the capital relationship on the table, we will do so," Saikawa said. "There has to be benefits to both sides."

Resuscitating the alliance is only part of Saikawa's homework.

On the operational front, Saikawa repeatedly stressed the importance of reigniting profitability in the U.S., the Japanese automaker's second-biggest market and its onetime cash cow.

Nissan and Infiniti's combined U.S. sales slid 9.3 percent to 1.44 million vehicles in the fiscal year ended March 31, while their U.S. market share eroded to 8.4 percent.

Nissan wants to dial back fleet sales and focus on retail. Saikawa told shareholders he wants a U.S. retail market share of 8 percent, but it languishes below 7 percent now.

Nevertheless, Saikawa predicted that the U.S. business will start to recover in the latter half of the fiscal year ending March 31, 2020, or in the following fiscal year.

"That's when you will start seeing results," Saikawa said, adding that Nissan's downturn will hit the bottom in the first half of the current fiscal year. "Profit recovery in the U.S. is key."