As Nissan Motor Co.'s former president, Carlos Ghosn, 64, received roughly 2 billion yen annually froｍ his company before disclosing the names of executives and their actual pay became mandatory in 2010, according to sources close to the arrested executive's financial scandal.
Although the automaker did not reduce the sum of Ghosn's pay after the change in law, it only stated it to be about 1 billion yen per year in its securities reports. Ghosn is alleged to have intended to collect the difference between the stated and actual salaries after he stepped down.
The Financial Instruments and Exchange Law requires companies to also state future remuneration in reports that would be made the same year the sum is finalized. Sources say the special investigation squad of the Tokyo District Public Prosecutors Office arrested Ghosn for allegedly falsifying the report after receiving a total of 5 billion yen, the sum of roughly 1 billion yen per year over five years. Ghosn allegedly ordered that his remuneration be reported as less than he actually received in order to avoid criticism of being paid too much.
Ghosn and Greg Kelly, 62, Nissan's former representative director, were arrested on Nov. 19 for allegedly violating the Financial Instruments and Exchange Law. The two are suspected of working in conspiracy to understate the charismatic leader's pay by about 5 billion yen in Nissan's securities reports covering fiscal 2010 to fiscal 2014. The two also allegedly falsified the reports from fiscal 2015 to fiscal 2017, stating the former president's total pay to be approximately 3 billion yen under the actual amount.
Since March 2010, listed companies have been asked to disclose on their securities reports the names of board members and exact amount of their pay when it exceeds 100 million yen. Companies had only been required to report the total amount of board salaries until then.
According to sources, Ghosn received about 2 billion yen annually for several years before the change in the reporting requirements. During a general shareholders meeting in 2007, Nissan was criticized for its excessive remuneration -- over 2.5 billion yen in total to its executives -- compared with Toyota Motor Corp., who paid a total of 1.5 billion yen.
Ghosn allegedly instructed his close aides, including Kelly, to "cut down the sum that would be disclosed to about a billion yen." Ghosn allegedly concluded his annual pay to be roughly 2 billion yen, and to have any difference be paid after he retired from the company.
According to Nissan's securities reports, the company paid a total of 2.581 billion yen to its executives for fiscal year 2008. The total amount of pay to executives fell by about 900 million yen to 1.689 billion yen from fiscal 2009, when the disclosure system was introduced, and it has stayed close to that level since then.
While Ghosn's pay was understated by roughly 1 billion yen less than the amount in the securities report for fiscal 2009, the investigation squad chose to arrest him on suspicion of falsifying the reports from fiscal 2010 to fiscal 2014. This was because the investigative authorities acknowledged the statute of limitations of seven years for the 2009 case, as well as the fact that he was staying overseas for a certain period of time, which would affect the statute of limitations.
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