Business / Corporate

How Nissan CEO Hiroto Saikawa went from defiant to fired in 24 hours

by Ma Jie, Kae Inoue and Masatsugu Horie

Bloomberg

Hiroto Saikawa’s tone bordered on defiant on Sept. 8 when discussing his future as chief executive officer of Nissan Motor Co. He accepted responsibility for the Carlos Ghosn scandals and said he’d resign after a successor was found, but he wasn’t taking the fall for a burgeoning controversy over his pay.

That strategy blew up 24 hours later when the embattled carmaker’s board pushed him out, citing his excess compensation. Saikawa’s last day will be Monday, and the board is looking at a pool of about 10 candidates for the job, probably one of the most challenging in global auto-making.

The end of Saikawa’s four-decade career came in a conference room at Nissan’s Yokohama headquarters, where board members met for more than five hours on Sept. 9 — with some joining by video from overseas, according to people familiar with the matter. Nissan declined to comment on board discussions and declined to make Saikawa available for comment.

Alliance partner Renault SA was represented by Chairman Jean-Dominique Senard and CEO Thierry Bollore.

During the meeting, directors said they weren’t happy with the slow progress in finding Saikawa’s replacement, and pushed for the process to be accelerated, according to the people, who asked not to be identified discussing a private matter. Saikawa had said at a news conference back in January that he would “pass the baton” to new leaders as soon as possible.

Board members then discussed the internal investigation into allegations that Saikawa and other executives were paid more than they were entitled to, according to the people. The report was prepared by a team led by Christina Murray, Nissan’s outgoing compliance chief, and parts of it were shown to directors, they said.

It contained allegations of financial misconduct by former Chairman Ghosn — the auto titan who ruled over Nissan for two decades and whose arrest for alleged financial crimes in November threw the carmaker into disarray — and former director Greg Kelly. But more importantly for Saikawa, there were details about his pay. Days earlier, the company had confirmed he was overpaid by ¥47 million ($438,000) via stock appreciation rights.

The controversy first came to light after Kelly accused Saikawa, 65, in a magazine interview in June of improperly receiving compensation.

Speaking outside his Tokyo home on Sept. 8 — prior to the board meeting — Saikawa said that he shouldn’t be blamed for the excesses, and that he wasn’t going to step down, especially after volunteering to pay the money back.

“I’m not responsible for that,” he told reporters. “I will take responsibility for the Ghosn scandals and want the board’s nomination committee to find a succession plan as soon as possible in order to pass the baton.”

Inside the boardroom, several external directors said the payments were a serious problem, particularly since it came at a time when Nissan was trying to strengthen its corporate governance, according to the people.

Saikawa fired back that he shouldn’t have to resign right away, the people said. Later at the news conference, Saikawa would say that he regretted having to step down before being able to finish all he had set out to do but that the timing of his resignation was up to the board.

But he and the directors volleyed arguments back and forth for some time, prolonging the meeting, according to the people. Although Nissan found no illegality, Saikawa shouldn’t be exonerated for delegating those rights to Kelly, Motoo Nagai, head of the audit committee, said after the board meeting.

Given the fallout from the Ghosn saga, which exposed the company’s shortcomings when it came to policing executive pay, Nissan decided to draw a line in the sand.

Eventually, worried about the perception of Nissan’s commitment to reform and the need to show a sense of urgency in turning things around, discussions heated up in the final hour and the board unanimously decided to remove Saikawa and search for the company’s third CEO in as many years, the people said.

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