Editor's note: An earlier version of this story incorrectly suggested that shareholders would decide Ghosn’s future as chairman. In addition, the director profiles at the bottom of the story inaccurately portrayed Ghosn's and Kelly's current status with the company.
TOKYO -- Nissan Motor Co.’s directors vote within a matter of hours on the remarkable move to oust Chairman Carlos Ghosn. But even if they decide to dismiss him, the disgraced executive and his accused co-conspirator might still keep their board seats -- at least for now.
That is because the company’s individual shareholders will be the final arbiters on whether Ghosn and board member Greg Kelly lose their director roles at Japan’s No. 2 automaker.
That will require another vote, and the next regular shareholders’ meeting is not expected to happen until June 2019. Nissan would have to convene an extraordinary meeting before then to remove Ghosn and Kelly anytime sooner. Nissan says that is one option.
Nissan’s board was scheduled to meet Thursday at the carmaker’s headquarters in Yokohama to hear details about the allegations of financial misconduct leveled against the two men and then vote on their dismissal. But the board can only strip Ghosn’s chairman’s title and Ghosn’s and Kelly’s positions as representative directors, Nissan says.That would leave them still holding the title of regular director.
A board member can only be dismissed as a director through a shareholder vote. Unless, of course, Ghosn or Kelly decide to resign in the face the board’s slap down.
The difference between the directorships is one of power and responsibility. Nissan’s nine-member board has only three representative directors: Ghosn, Kelly and CEO Hiroto Saikawa.
Representatives are empowered to act as legal representatives for the company in such matters as entering business deals. The responsibility also brings special liabilities.
The framework sets up the potential for a shareholder showdown, should it come time to fully excise Ghosn and Kelly from the company. Nissan’s French partner Renault -- where Ghosn still keeps his job as CEO and chairman -- holds a controlling 43.4 percent stake in Nissan.
But Nissan may not need to worry about the Renault voting bloc thanks to a stopgap clause in its alliance agreement with the French automaker, spokesman Nicholas Maxfield said.
Nissan says that clause was added in 2015, when Renault and Nissan had an earlier standoff over possible interference in the Japanese company’s corporate governance.
At the time, the French government -- which is Renault’s single biggest shareholder with a 15 percent stake -- was moving to increase its control over Renault. To allay Japanese concerns about government meddling, Renault agreed to limit its formal control of partner Nissan.
The upshot of the deal, in Nissan’s understanding, is that Renault will exercise its voting rights in support of any Nissan board decision regarding the removal, appointment or compensation of a board member. Thus, Nissan would bank on Renault to marshal its 43.4 percent voting power behind whatever recommendation comes out of the Nov. 22 meeting of Nissan’s board.
Following the arrests of Ghosn and Kelly earlier in the week, CEO Saikawa has already said he will propose that the board fire both men. Nissan accuses Ghosn of under-reporting his income over multiple years, abusing company expenses and misusing corporate investment funds.
Japanese media say prosecutors suspect Ghosn hid ¥5 billion ($44 million) of income from 2010 to 2014. The income he disclosed to authorities was less than half his actual haul.
Without Ghosn or Kelly -- both men reportedly have been locked in a Tokyo detention center since their arrest -- Nissan’s vote is expected to go ahead with the remaining seven members.
They include CEO and representative director Saikawa, a Nissan lifer, as well as Nissan executive Hideyuki Sakamoto and former Nissan Vice Chairman Toshiyuki Shiga.
Bernard Rey, a former president of the Renault Formula One team, is also on the board.
The three external directors are: former Renault financial officer Jean-Baptiste Duzan, race car driver Keiko Ihara and Masakaza Toyoda, a longtime official at Japan’s power Ministry of Economy, Trade and Industry.
With a potential showdown brewing, how might sides align on the Nissan board?
Out of action
- Carlos Ghosn, 64: Arrested and detained in Japan. The legendary turnaround artist who saved Nissan from bankruptcy was a high-flying executive -- until the very company he saved accused him of pocketing millions through financial misdeeds.
- Greg Kelly, 62: Arrested and detained in Japan. The American attorney rose through the ranks focusing mostly on human resources, first at Nissan North America, then at headquarters in Japan and ultimately for the entire alliance. He joined the board in 2012 but this week was tarred as the “mastermind” behind Ghosn’s alleged schemes.
- Hiroto Saikawa, 65: President and CEO. The Nissan lifer joined Japan’s No. 2 automaker in 1977 and rose to prominence as the point man in the Renault Nissan Purchasing Organization, the innovative cross-company team that bolstered the carmaker’s profits while pushing down costs. The longtime Ghosn protégé soured on his boss after taking full control as sole CEO in April 2017. Only then did Saikawa begin charting his own course for the company and reversing some of the questionable business strategies pursued by Ghosn.
- Hideyuki Sakamoto, 62: Executive vice president for manufacturing and supply chain management. Globetrotting Sakamoto has almost done it all since joining Nissan in 1980. The fluent English speaker has worked at the Nissan Technical Center North America in the U.S. and for Renault in Brazil. He has even worked as at the parts supplier Calsonic Co. on an exchange program. Sakamoto began his career as a body test engineer and rose to lead global product engineering before tackling his new duties in worldwide manufacturing in January.
- Toshiyuki Shiga, 65: Board member. The Nissan warhorse Shiga has seen the Alliance unfold, evolve and rapidly expand, all up close and personal. Ghosn was so impressed with the business acumen of this veteran corporate planner that he tapped Shiga as his COO in 2005. Shiga joined the board the same year and was promoted to vice chairman under his erstwhile mentor in 2013. Shiga dropped that title in 2017 but continues to serve on the board.
- Jean-Baptiste Duzan, 72: The French financial guru began his career at the Citibank group in 1970, moving through Paris and other international assignments. Duzan, an outside director sitting on the Nissan board since 2009, landed in Yokohama by way of a 23-year career at Renault. During his tenure at the French automaker, he was director of financial operations and senior vice president of purchasing. He served more than a decade on Renault’s management board before retiring from the company in June 2009.
- Bernard Rey, 72: This former president of the Renault Formula One team has bounced back and forth between France and Japan since starting his career at Renault in 1969 and working in purchasing. When Renault staged its 1999 rescue of the then-faltering Nissan, Ghosn handpicked the French executive as one of the 30 Renault leaders he would bring to Japan to spearhead Nissan’s revival. Rey returned to Renault to 2007 and retired from the carmaker in 2011. He was named to the Nissan board three years later.
- Keiko Ihara, 45: A lead-footed speed-demon, this professional race car driver has a penchant for tearing up the track in a Nissan GT-R or any other car with 300-plus horsepower. A long-time ambassador for motorsports, she was appointed to the board in June as part of a nationwide campaign to inject more outside voice into the male-dominated hierarchy of Japan Inc. Ihara’s interest in racing began during her days as a grid girl for Formula One. But it really took off when she realized she could drive the cars and not just stand beside them. She soon became the only female racer from Japan competing in the grueling World Endurance Championship series.
- Masakazu Toyoda, 69: Another appointment meant to shore up corporate governance with third-party input, Toyoda brings insight into the inner workings of Japanese government. A longtime official at the power Ministry of Economy, Trade and Industry, Toyoda specializes in trade relations, international affairs and energy. He joined Nissan’s leadership team in June.