Nissan Cuts Ex-CEO Saikawa's Exit Package

By Sean McLain

TOKYO -- Nissan Motor Co.'s board sharply cut the exit package of ousted Chief Executive Hiroto Saikawa, who presided over a pronounced decline in the car maker's earnings, according to people familiar with the decision.

The company's human-resources staff initially calculated that Mr. Saikawa was due around $15 million as a lump sum upon his departure from the company, but the board decided to pay him about $3 million, these people said.

The board also canceled a system that had allowed departing executives to remain with the company in a consulting role. As a result, the 66-year-old Mr. Saikawa severed his connection with Nissan as of Feb. 18 for the first time since 1977, when he joined the company out of college.

Mr. Saikawa, long a lieutenant of former Chairman Carlos Ghosn, was the company's chief executive in November 2018, when Mr. Ghosn was arrested in Tokyo and charged with financial misconduct. Mr. Ghosn says he is innocent. In the following quarters, sales and profit at the car maker plunged as a turnaround plan failed to deliver results.

Mr. Ghosn had driven the company to meet aggressive sales targets, Mr. Saikawa said, but the growth was fueled by costly discounts that eroded profits. Mr. Saikawa's remedy was to charge more for its cars, particularly in the U.S., arguing that what Nissan lost in volume it would eventually make up in profit margin.

But sales fell far more than expected, and in July 2019 Mr. Saikawa said he would slash costs by cutting back production and laying off 9% of the workforce.

Nissan's board last year removed Mr. Saikawa after a company investigation found that in 2013, Mr. Saikawa, then an executive vice president, had received improper stock-based performance compensation. Mr. Saikawa said he was unaware that his performance payment was inflated and pledged to return the money. He wasn't accused of wrongdoing.

At a special shareholder meeting Feb. 18, Mr. Saikawa lost his board seat at Nissan, his final position at the company, triggering the departure payment. Directors approved the roughly $3 million amount after deciding the payment should reflect Nissan's performance, said a person familiar with the decision.

Mr. Saikawa didn't contest the decision, said one of the people familiar with the matter.

"In the past, we didn't have a clear policy on compensation at the end of service," said Keiko Ihara, the director in charge of compensation issues, at the shareholder meeting. She said the board decided to take into account the reasons for an executive's departure and the performance of the company.

"Thanks to this clear definition, no matter who the director is, the compensation at the end of service will be decided after considering the company's results," Ms. Ihara said.

Nissan, now led by CEO Makoto Uchida, reported earlier this month its first quarterly loss since 2009 and said deeper cost cuts were needed.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

February 21, 2020 08:33 ET (13:33 GMT)

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