Nissan's Carlos Ghosn Forced Aides Into Post-Retirement Payment Scheme: Report
Former Nissan chairman Carlos Ghosn is in more hot water after additional allegations of financial misconduct have emerged. Reports by Japanese news outlet Yomiuri Shimbunm state that Ghosn instructed his closest aides to pen annual memos declaring promised financial compensation to be distributed after Ghosn’s retirement.
Although Ghosn carried an extremely successful reputation for bringing back Nissan from near-bankruptcy, Ghosn bore heavy criticism for being one of the highest-paid executives of any Japanese company. As a result, reports suggest that the ex-chairman attempted to hide his total financial compensation in a scheme that would guarantee him additional remuneration after his departure from the automaker.
According to allegations, Ghosn’s traceable actions stem back nearly nine years. Beginning in 2010, Japan’s Financial Instruments and Exchange Law would require heightened transparency surrounding corporate pay. As a result, all executive compensation had to be reported in financial disclosure statements to the Japanese Financial Services Agency; including future fiscal compensation that would not be immediately paid out.
This led to Ghosn’s annual compensation of $17.7 million (2 billion Japanese Yen) being falsely reported as only $8.8 million (1 billion JPY). Not mentioned to investors was the alleged, internal-only guarantee of an additional $8.8 million which would be paid out after his retirement. However, against the Financial Instruments and Exchange Law, the future income was not included in Nissan’s securities reports, as the only parties who were directly informed of the compensation sat in the executive’s inner circle.
To carry out the hidden payments, Ghosn allegedly instructed American Greg Kelly, his closest advisor and implicated partner in crime, to write an annual memorandum which would be passed around other top executives guaranteeing the additional $8.8 million.
Ghosn stands accused of instructing Kelly to misstate his financial compensation from Nissan by roughly $44.2 million (5 billion JPY) over a five year period ending in 2014 and another $26.5 million (3 billion JPY) from 2014 through 2017. Nissan shareholders eventually voted to reduce then-CEO Ghosn’s $8.8 million pay package by more than 30 percent for fiscal year 2017; the same year the CEO stepped down and only kept the title of board chairman.
Lastly, because the memo guaranteed payment after Ghosn departed the company, he would no longer be required to report the income under Japan’s Financial Instruments and Exchange Law. Nissan would also be required to make up this additional funding through additional profiteering, as the compensation was not set aside in accordance with the board’s pre-approved annual remuneration budget, which totaled $13.3 million in 2009.
Japan considers Ghosn’s financial misconduct to be a more severe crime than insider trading.
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