NEW YORK -- Nissan and former CEO Carlos Ghosn agreed to pay a combined $16 million to settle a U.S. regulator’s allegations that the automaker failed to disclose millions of dollars in compensation that Ghosn was due to receive.
Nissan was fined $15 million, while Ghosn will pay a $1 million penalty, the Securities and Exchange Commission said in a statement on Monday.
The claims stem from a decision that allegedly gave Ghosn broad authority over pay decisions after Nissan's board delegated to him power to set compensation for executives and directors, including his own.
From 2009 until fiscal year 2018, Ghosn, with substantial assistance from his subordinates, took part in a scheme to conceal more than $90 million in compensation from investors, according to a complaint filed Monday in Manhattan federal court. Ghosn, with the assistance of director Greg Kelly, decided to structure the payments after his retirement to avoid public disclosure.
Kelly agreed to a $100,000 penalty and a five-year officer and director bar.
The SEC said Nissan provided significant cooperation. Nissan now has a new governance structure with three statutory committees -- audit, compensation and nomination -- and has amended its securities reports for all relevant years.
"Investors are entitled to know how, and how much, a company compensates its top executives. Ghosn and Kelly went to great lengths to conceal this information from investors and the market," said Stephanie Avakian, co-director of the SEC's Division of Enforcement.
Nissan, Ghosn, and Kelly settled without admitting or denying the SEC's allegations and findings.
"We are pleased to have resolved this matter in the U.S. with no findings or admission of wrongdoing," Ghosn's defense team said in a statement. Ghosn would continue to fight a criminal case in Japan, they said.
The SEC said in total Nissan in its financial disclosures omitted more than $140 million to be paid to Ghosn in retirement -- a sum that ultimately was not paid. The SEC also accused Ghosn in a suit filed in New York that he engaged in a scheme to conceal more than $90 million of compensation. That suit is being settled as part of the agreement announced Monday.
Nissan confirmed it had settled the allegations and said it "is firmly committed to continuing to further cultivate robust corporate governance."
Ghosn remains in Japan awaiting trial on finance-related charges. He was arrested last November and has repeatedly claimed he did nothing wrong.
Lawyers for Ghosn, 65, and Kelly, 63, said the decision to settle with the SEC should have no bearing on separate Japanese cases against their clients.
“Greg is a guy with limited resources,” said James Wareham, a Washington-based attorney for Kelly. He said that his client settled so that he can concentrate on the case he faces in Japan.
Renault has unsuccessfully sought a full-blown merger with its larger partner Nissan, which plans to cut around one-tenth of its global workforce and to slash production capacity while shuttering underutilized plants
Reuters contributed to this report.
