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Abu Dhabi, UAESunday 21 April 2019

Nissan's CEO in spotlight over $40m payment to Ghosn

Hiroto Saikawa approved an employment contract for Mr Ghosn, raising questions about how much executives knew about former chairman's financial rewards

Former Nissan chairman Carlos Ghosn was given an employment contract. Bloomberg
Former Nissan chairman Carlos Ghosn was given an employment contract. Bloomberg

A $40m lump sum payment to Carlos Ghosn was approved by Nissan’s chief executive as part of a proposed retirement package that raises new questions about how much senior executives knew about their deposed chairman’s financial rewards.

Hiroto Saikawa approved a 10-year employment contract for Mr Ghosn as “chairman emeritus”, according to the 2012 document seen by the Financial Times, The former chairman was arrested on November 19 and later charged with falsifying his pay in financial documents by not including more than $80m in deferred compensation that he was set to receive over an eight-year period. According to the FT, the employment contract also permitted him continued use of company properties in Rio de Janeiro, Paris and Lebanon.

Under the agreement, Nissan was expected to make a lump-sum payment of $40m for the advisory role after Mr Ghosn stepped down as chairman, and provide an annual salary of $4.4m which would be increased to $6m if the company met certain targets.

Mr Ghosn would also be entitled to use residential properties as well as offices in Japan and other locations.

Those same properties were a focus of Nissan’s internal investigation last year into Mr Ghosn, with the car maker finding he had acted improperly in the way the properties were acquired and the amount of money spent on their renovation, according to people familiar with the investigation.

The employment agreement was signed by Mr Saikawa and Greg Kelly, another Nissan board member who was charged with conspiring with Mr Ghosn to falsify Nissan’s financial statements. Mr Kelly has denied the charges. It is not clear if the document was the final version of the agreement.

On his deferred compensation, Mr Ghosn has said there was no undisclosed binding contract with Nissan for a fixed amount of pay. He has also denied all other charges.

With the trial of Mr Ghosn set to start in Tokyo later this year, the employment document has increased concerns among some senior Nissan executives that Mr Saikawa’s continued leadership of the car maker will be seen as a failure to make a break from the past.

Later this week, a panel of external experts commissioned by Nissan is expected to recommend an overhaul of the car maker’s board with a majority of directors to be made up of external appointments. But sources say Mr Saikawa is expected to remain as chief executive.

But it remains unclear whether Mr Saikawa knew that payments for the role of chairman emeritus were connected to what prosecutors have alleged was Mr Ghosn’s undeclared deferred pay.

Nissan declined to comment and declined an interview request for Mr Saikawa, the FT said. Tokyo prosecutors declined to comment. A spokesman for Mr Ghosn could not immediately be reached for comment on the document.

Updated: March 25, 2019 08:40 PM

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