By Nick Kostov and Sam Schechner
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 28, 2018).
PARIS -- Executives from Renault SA and Nissan Motor Co. are set
to convene Thursday for a meeting that will test the solidity of
their two-decade alliance -- and whether the smaller French company
can keep the upper hand.
It will be the first board meeting for the alliance since police
arrested Renault Chief Executive Carlos Ghosn in Japan on suspicion
of financial misconduct, and Nissan removed him as its
chairman.
Thursday's gathering is to be the first between the companies in
two decades without any input from Mr. Ghosn. He built their
alliance into an automotive behemoth with himself at its nexus --
and empowered to cast the tiebreaking vote in the Dutch joint
venture that manages cooperation among alliance members.
Mr. Ghosn, who remains in jail as Japanese authorities
investigate, hasn't been charged with any crime. He has denied
wrongdoing, according to Japanese public broadcaster NHK.
People close to Nissan say Mr. Ghosn's ouster is an opportunity
to rebalance power with Renault. People close to Renault said the
company would oppose any attempts to fundamentally reshape their
partnership. Attendees at Thursday's meeting in Amsterdam -- which
typically includes not just board members but executives and
operational managers from both companies -- will determine whether
they can get back to the day-to-day business of managing a global
supply chain after the partnership was shaken to its core.
Underscoring the tensions between the two companies, Renault was
waiting early this week for confirmation on whether Nissan CEO
Hiroto Saikawa and other top Japanese executives planned to fly to
the Netherlands, or join the meeting by teleconference, before
deciding whether to send its own top brass, according to people
close to the French car maker. As of Tuesday, both Mr. Saikawa and
Renault's deputy CEO, Thierry Bollore, appeared unlikely to travel
to Amsterdam, people close to both companies said.
When asked about the meeting, Mr. Saikawa, a protégé of Mr.
Ghosn who denounced his former mentor last week, told reporters
outside his Tokyo home he expected business as usual.
"It's just a normal meeting," Mr. Saikawa said.
For now, Renault has asked managers further down the chain of
command to attend in person to get customary face time with their
Japanese counterparts, according to a person close to the French
car maker. "It's the first time top teams and operational teams
will meet and speak after the events of last week," the person
said. "It's an important human meeting."
The alliance dates to 1999, when Renault bailed out a
then-struggling Nissan, eventually ending up with a 43% stake in
the Japanese company. That culminated in a relationship in which
the French company is the senior partner, despite selling 35% fewer
vehicles in 2017. Nissan also owns a 15% stake in Renault, but has
no voting rights.
As part of the alliance, the companies pool technology, basic
components, and research and development, creating global scale
that allows them to better compete with giants like Volkswagen AG,
Toyota Motor Corp. and General Motors Co.
Mr. Ghosn serves as the alliance's chairman and CEO, a role he
still has at Renault and once held as well at Nissan. Mr. Ghosn
stepped down as CEO of Nissan in 2017 but remained chairman until
his removal last week.
A Dutch entity, Renault-Nissan BV, has since 2002 managed much
of the partnership. It owns subsidiaries responsible for tasks
including joint purchasing and information-technology services. Its
expenses, which totaled more than EUR150 million ($170 million) in
2016, include management fees for executives, services provided to
alliance partners and payments to outside consultants, according to
the Dutch filings.
Most meetings of the alliance are focused on the companies'
operations, and how to further cut costs or share functions,
according to a former board member. Company filings show the Dutch
entity has updated its bylaws three times, in part reflecting Mr.
Ghosn's job changes within the alliance, while ensuring he
maintained a deciding vote.
On paper, Renault's effective control of the entity looks
difficult to dislodge. Renault-Nissan's board is evenly split
between directors nominated by each company. But according to the
alliance's bylaws, Renault's directors alone can name or remove the
entity's chairman and chief executive, who has a tiebreaking vote
whenever there is a deadlock. Mr. Bollore will serve as a proxy for
Mr. Ghosn at Thursday's meeting, keeping Renault's votes intact,
people close to the French auto maker said.
But a rigid application of the alliance's rules risks alienating
Nissan when Renault and the French government are seeking to
preserve the alliance. Mr. Saikawa, who serves as Renault-Nissan's
vice chairman, is expected to chair Thursday's meeting in Mr.
Ghosn's absence, giving him a measure of control over how it
proceeds.
Complicating matters, Nissan told Renault's board last week that
the company may have uncovered evidence of wrongdoing involving the
Dutch entity, according to people familiar with the matter. Renault
board members said that any investigation would need to be carried
out by both companies, the people said.
Thursday's meeting was planned long before Mr. Ghosn's Nov. 19
arrest in Japan. Prosecutors say they suspect Mr. Ghosn understated
his compensation by a total of about $44 million, people familiar
with the matter said. Osamu Masuko, the CEO of Mitsubishi Motors,
which is the newest addition to the alliance, said he would attend
via videoconference, though he isn't a member of the Renault-Nissan
BV board.
The French state, which owns 15% of Renault, has long said it
wanted Mr. Ghosn to change the alliance's legal structure to make
it irreversible. Mr. Ghosn has warned that tinkering with the
architecture of the alliance poses unforeseen risks because of the
various approvals needed to make changes.
On Tuesday, France's finance and economy minister, Bruno Le
Maire, told French TV he hoped at the alliance would be
strengthened but the balance of power and cross-shareholdings that
exist today between Renault and Nissan "were right."
Mr. Le Maire also said the bylaws of the alliance that allow
Renault to name the entity's CEO and chairman "must not change."
Mr. Saikawa, Nissan's CEO, said last week that the alliance had
invested too much authority in one person and he wanted "a more
sustainable structure."
--Sean McLain in Tokyo contributed to this article.
Write to Nick Kostov at Nick.Kostov@wsj.com and Sam Schechner at
sam.schechner@wsj.com
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November 28, 2018 02:47 ET (07:47 GMT)
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