Saikawa’s ouster must be used to reform corporate culture at Nissan

The Yomiuri ShimbunTwo top corporate executives have been forced to step down in succession, due to their misconduct. This situation is unusual. To restore the trust it has lost, their company should hasten to reform its corporate governance.

Nissan Motor Co. has announced that President and Chief Executive Officer Hiroto Saikawa will resign, effective on Monday. It has been found that he improperly received executive remuneration that exceeded the amount he should have been paid by about ¥47 million. This has been brought to light through an in-house investigation, and the carmaker’s board of directors unanimously demanded Saikawa be replaced at an early date.

Given that questions have been raised about his qualifications as a corporate executive, Saikawa has good reason to step down.

He has been under fire for not having been able to perceive the alleged wrongdoing perpetrated by former Nissan Chairman Carlos Ghosn, a defendant in an upcoming trial. The announcement comes after serious questions arose as to Saikawa’s responsibility for having supported Ghosn as a corporate executive. The latest revelation of Saikawa’s improper remuneration has added to irregularities perpetrated earlier in tests for completed Nissan cars and the company’s slumping business performance.

“We’ve decided this is the best timing [for Saikawa’s exit], from the standpoint of a uniting force both within and outside the company,” the chairman of the board meeting, Yasushi Kimura, said at a press conference.

Since June, seven external directors have held seats on the 11-member board, meaning more than half of the board hails from outside. The latest case can be described as showing that Nissan’s new managerial framework, which utilizes external scrutiny, has started functioning to a certain extent to check itself. The carmaker must make continued efforts to increase its self-cleansing power as an organization.

Choice of successor key

The case in question concerns a mechanism called stock appreciation rights (SARs), under which the amount of executive remuneration is linked to changes in stock prices. If there is a rise in stock prices on a day specified in advance for exercising SAR, compared to some previous point in time, SAR holders can be paid the difference in the form of money. Saikawa’s SAR was exercised one week after the initially set date in response to a stock price rise, and this increased the amount of his remuneration.

Although Saikawa denied his involvement in the manipulation of the date, Nissan concluded that his action of leaving remuneration-related procedures to someone else had violated its in-house regulations.

There is no overlooking the revelation that similar additions have been made to the amount of remuneration received by two former directors, as well as four current and former operating officers. This can be inevitably seen as indicating that Nissan has a deep-rooted corporate culture in which top-level officials are leniently treated.

Nissan’s sales have been slumping in the North American market, a main segment of the carmaker’s marketplace, and the company has drawn up a plan to cut more than 10,000 employees by the end of fiscal 2022. Unless Nissan changes its organizational nature, it will not be able to gain understanding from parties such as the employees who will have to bear that pain. Saikawa’s resignation should be used as an opportunity to revive Nissan.

Nissan is scheduled to select Saikawa’s successor by the end of October. Its nomination committee, which consists of external directors and others, will narrow down the list of candidates both from within and without. The carmaker is set to rebuild its relationship with Renault S.A. of France, which has called for business integration between the two, while also maintaining its independence. Saikawa’s successor must be well informed about the rapidly changing global automobile industry, while also having the ability to carry out reforms. Whether Nissan can choose such a person as its new president will hold the key to its revival.

(From The Yomiuri Shimbun, Sept. 11, 2019)Speech


Click to play


+ -

Generating speech. Please wait...

Become a Premium Member to use this service.

Become a Premium Member to use this service.

Offline error: please try again.