Former Nissan Motor Co. Chairman Carlos Ghosn earned about 2.4 billion yen (about 21 million dollar) in annual remuneration over the past two business years, including payments that were not declared in the company's securities reports, it has been learned.
The combined total of Ghosn's compensation and that of other directors exceeded the collective limit for the automaker's board members for two consecutive years, according to sources. The limits were approved at general shareholders meetings.
The special investigation squad of the Tokyo District Public Prosecutors Office, which arrested Ghosn, 64, last month, believes the former chairman failed to declare part of his remuneration in the reports and decided his own compensation in violation of the Companies Law, which includes provisions for the total remuneration of directors.
The law stipulates that the total remuneration for directors shall be decided at a general shareholders meeting to prevent executives from setting high compensation at their own discretion, thus harming the interests of shareholders. There are no penalties for violating this provision.
At its annual meeting in 2008, Nissan's shareholders set the maximum combined annual compensation for all directors at 2.99 billion yen. The maximum limit is publicized every year in the company's securities reports.
Disclosure of executives' identities and their actual pay became mandatory during the business year ending March 2010. Since then, Ghosn decided to receive about 1 billion yen out of around 2 billion yen in his annual compensation package after his retirement and not include the future remuneration in the company's reports, according to sources.
Nissan's report stated Ghosn as receiving 1.098 billion yen in compensation for the year ending March 2017, the last year he served as president and chief executive officer. When future remuneration is included, however, the actual sum rose to about 2.4 billion yen, according to sources.
The following business year, the company reported Ghosn's compensation to be 735 million yen, down 33 percent, because he had stepped down from his posts. However, his actual remuneration that year also came in at about 2.4 billion yen, according to sources.
The special investigation squad believes that Nissan's report for the business year ending March 2016 also understated Ghosn's compensation, meaning the former chairman's combined underreported remuneration is expected to exceed 4 billion yen over the latest three business years.
The company reported the combined remuneration for its executives to be 1.836 billion yen for the business year ending March 2017, while the sum stood at 1.564 billion yen for the following period.
After including Ghosn's understated remuneration, however, the actual sum rises to about 3.1 billion yen for the business year through March 2017 and about 3.2 billion yen for the following period.
Ghosn was arrested on suspicion of violating the Financial Instruments and Exchange Law for conspiring with Greg Kelly, a 62-year-old former representative director at Nissan, and understating his remuneration by about 5 billion yen over five years from the business year ending March 2011.
The two have reportedly denied the allegations, telling the special investigation squad they were not obliged to report the remuneration Ghosn was to receive after his retirement because the future payment had not been finalized.
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