Nissan Motor Co. must expedite reconstruction of its management by encouraging robust discussion among its board of directors.
This is part of reform proposals made in a report compiled by a special panel for improving governance at Nissan.
In the report, the panel called on Nissan to switch to a company structure with statutory committees, including an audit committee in which outside directors mainly take the initiative to supervise management. The panel also proposed that the majority of directors be selected from outside Nissan.
Referring to a series of scandals involving former Chairman Carlos Ghosn, who was indicted on such charges as aggravated breach of trust, the panel determined that the cause for his alleged misconduct was concentration of power in his hands. Moreover, the panel proposed abolishing the post of company chairman and appointing an outside director to be chairman of the board of directors, which had previously been served by the company chairman.
Enhancing the transparency of management by taking advantage of the stern eyes of outside directors and revitalizing the company's board of directors, which has become dysfunctional -- these aims intended by the panel are understandable.
The problem is whether the intended reforms are workable. Changing the management framework alone cannot be regarded as enough.
The special panel pointed out that Ghosn had been deified at Nissan as the savior who led its reconstruction and this fostered a corporate culture that would not allow any objection to his decisions.
It is imperative to proceed with reforming the awareness of management and employees to have a higher sense of ethics and tackle the task of reexamining the conventional corporate culture.
President and CEO Hiroto Saikawa and other executives who are part of Nissan's current management are called on to accept responsibility for leaving organizational problems unresolved.
Choice of outside directors key
The proposed company management system is designed to consist of the statutory committees, including one that will decide the amount of compensation for executives, and a nomination committee, which will decide on candidates for the board of directors.
The special panel proposed that the compensation committee consist of those directors on the board who were selected from outside of Nissan. This could be aimed at reforming the situation in which a specific executive decides on the compensation amount for self-serving reasons, and preventing a recurrence of wrongdoing.
There are cases in which such irregularities such as those related to accounting cannot be prevented even if the board of directors includes many outside directors, as in the case of Toshiba Corp.
The selection of outside directors will become crucial because their influence on corporate management will become stronger. It is essential to tap competent personnel equipped with abilities and insight.
The automobile industry is entering a phase of major change as it faces fierce competition in the development of technologies, including for electric vehicles and self-driving.
On top of management reform, carmakers must tackle the task of devising growth strategies for survival.
This year marks the 20th anniversary of the conclusion of a capital tie-up between Nissan and French carmaker Renault. The three-way alliance, including Mitsubishi Motors Corp., has become the world's second biggest grouping of carmakers.
The three automakers will shift to a council system to decide on strategies based on discussions among their top executives, after breaking with the system of group management reliant on Ghosn. It is essential for the three companies to proceed steadily with mending their relationship of trust.
(From The Yomiuri Shimbun, March 29, 2019)
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