September 8, 2019 / 1:59 PM / 13 days ago

Nissan's Saikawa bows to pressure, to quit as CEO on September 16

YOKOHAMA (Reuters) - Nissan Motor Co (7201.T) CEO Hiroto Saikawa will resign on Sept. 16, the automaker said on Monday, bowing to pressure after he admitted to being improperly overpaid and marking further upheaval at a company battered by scandal and plunging profit.

Saikawa, who admitted to the overpayment of around $440,000 last week, will be temporarily replaced by Chief Operating Officer Yasuhiro Yamauchi, with a permanent replacement expected by the end of October, Japan’s second-largest automaker said.

His sudden resignation, which comes before a long-term succession plan has been decided, marks a dramatic exit for a man who had been tasked with righting the automaker following the arrest and ouster of former chairman Carlos Ghosn last year on charges of financial misconduct, which Ghosn denies.

Saikawa, a protege of Ghosn, took over as Nissan CEO from his mentor in 2017, leaving Ghosn as chairman. His brief tenure has been characterized by strain with top shareholder Renault SA (RENA.PA) and tumbling profit. Nissan’s shares have lost almost a quarter of their value this year.

The worsening relationship with Renault has been a particular concern for investors and has cast doubt on the future of the Franco-Japanese automaking alliance at a time of sweeping change and uncertainty in the global auto industry.

“Saikawa recently has indicated his inclination to resign, and in line with his desire to pass the baton to a new generation of leaders at Nissan, he will resign on Sept. 16,” Nissan’s chairman of the board, Yasushi Kimura, told a news conference.

Among the candidates to lead the maker of the Rogue SUV crossover and the Leaf all-battery electric car are non-Japanese, women, and those hailing from Renault, the chairman of Nissan’s nomination committee, Masakazu Toyoda, told reporters.

Addressing reporters alone at the end of a late-night news conference, the 65-year-old Saikawa expressed regret for his failure to turn around the firm which he has said had long chased market share at all costs under Ghosn’s tenure, undermining profitability.

“I had hoped to solve all of these issues before stepping down,” he said, referring to the automaker’s problems. “But I haven’t been able to, and for that I apologize.”

Nissan CEO Hiroto Saikawa speaks to media before the company's board members meeting in front of his residence in Tokyo, Japan September 9, 2019, in this photo taken by Kyodo. Mandatory credit Kyodo/via REUTERS

Stoic and contrite, Saikawa also took aim at his former mentor, saying he hoped that Ghosn and former director Greg Kelly felt regret for Nissan’s current situation resulting from their financial misconduct. Kelly also denies any wrongdoing, as both await separate trials in Japan.

INTERNAL INVESTIGATION

Saikawa said he would return the improper compensation, having conceded he was wrong to appoint a separate team led by Kelly to manage his share-based salary incentive scheme. An internal investigation found that the procedure violated company rules, although it was not illegal.

While Saikawa has said he did not intend to break the rules, his admission of overpayment has pitched Nissan into fresh crisis and appears to have accelerated the push for a replacement.

The nomination committee, established in June to find a successor, was now speeding up its search to find a successor from a list containing around 10 possible candidates. The committee is made up of six company outsiders, including Renault Chairman Jean-Dominique Senard.

Those on the list include Jun Seki, tasked with Nissan’s performance recovery; Yamauchi, the COO; and Makoto Uchida, chairman of Nissan’s management committee in China, an alliance source has told Reuters, speaking on condition of anonymity.

FUTURE WITH RENAULT

A key question will be how Saikawa’s successor approaches the alliance with Renault.

Seki has been seen as a front-runner to become CEO. Prior to his latest promotion in June, the 58-year-old oversaw Nissan’s expansion in China, now the automaker’s top market. He joined the company in 1986.

Nissan CEO Hiroto Saikawa speaks to media before the company's board members meeting in front of his residence in Tokyo, Japan September 9, 2019, in this photo taken by Kyodo. Mandatory credit Kyodo/via REUTERS

Yamauchi, 63, is widely seen as a bridge between the alliance partners, and the near four-decade Nissan veteran is known to be well-regarded at Renault where he serves as a board member.

Nissan also said that a nearly year-long internal probe prompted by Ghosn’s arrest in November had found that Ghosn and Kelly were responsible for financial misconduct at the company totaling around 35 billion yen ($326.98 million).

Improper activities included concealing Ghosn’s salary, using company assets for personal purposes, and improper payments using Nissan funds that eventually were transferred to Ghosn and a firm related to him, the company said.

Reporting by Naomi Tajitsu in Yokohama and Maki Shiraki in Tokyo; Additional reporting by Chang-Ran Kim in Tokyo and Laurence Frost in Paris; Writing by David Dolan; Editing by Stephen Coates, Mark Potter and Matthew Lewis

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