The Yomiuri ShimbunIt can be praised as one step toward governance reform for Nissan Motor Co. The automaker needs to accelerate efforts to regain trust and restore its business performance.
At a Nissan ordinary shareholders meeting, shareholders voted to approve a proposal for Nissan to transition to a company with nomination and other committees, to separate the supervision and execution of its business.
Power was previously focused on former Chairman Carlos Ghosn, allowing wrongdoings to occur. Structural reform is a key item in the management reforms hammered out from that lesson.
Of the 11 board of directors who will supervise the business, seven are independent outside directors. The company needs to heighten the effectiveness of its reforms by utilizing the eyes of the outsiders.
At the shareholders meeting, some called for President and Chief Executive Officer Hiroto Saikawa to be held responsible for his role in supporting the system under Ghosn. “I will fulfill my remaining responsibilities and accelerate the establishment of a successor organization,” Saikawa said. The Nissan president must humbly accept criticism and tackle the rebuilding of the company.
One issue is that Nissan’s relations with its largest shareholder Renault SA — which holds a more than 40 percent stake in Nissan — have cooled.
Three committees will be established in the new company, including the Nomination Committee, which will decide candidates for board members.
Appointment leaves questions
From Renault, Nissan initially planned only to appoint Chairman Jean-Dominique Senard to the Nomination Committee. The Renault side opposed this idea and expressed its intention to abstain from voting on the reform proposal.
The reform proposal was expected to be voted down if Renault abstained. So Nissan proposed a concession plan that would give Renault CEO Thierry Bollore a seat on the Audit Committee, which checks the execution of tasks. The matter has been settled, but Renault’s involvement in Nissan management will obviously deepen.
A set of recommendations for improving governance, compiled by a panel of outside experts in March, specified that it is not desirable for a member of the Audit Committee to concurrently serve as a director of a large shareholding company. This is based on the grounds that such a member could represent the interests of that leading shareholder. The Bollore appointment leaves questions because it runs counter to the spirit of the recommendations.
Renault will continue exploring business integration with Nissan. It is understandable for Nissan, which wants to maintain its independence, to increase its mistrust of Renault over its handling of the matter.
Meanwhile, Renault has now gone back to the drawing board with plan to integrate with leading European-U.S. automaker Fiat Chrysler Automobiles.
Nissan was not notified that the two sides were conducting negotiations until immediately before the announcement. It is hard to say that Nissan and Renault had sufficient communications. First, the two sides must build up their dialogue.
The Nissan group employs about 140,000 employees and does business with several thousand companies, including parts makers. Its ups and downs will have a great impact on local economies. It is important for the two sides to mend their trust in each other and to improve their competitiveness as the world’s second-largest auto alliance.