Nissan Chief Executive Hiroto Saikawa attends a press conference in the automaker's headquarters in Yokohama, near Tokyo, Monday, Sept. 9, 2019. Saikawa tendered his resignation Monday after acknowledging that he had received dubious income and vowed to pass the leadership of the Japanese automaker to a new generation. (AP Photo/Koji Sasahara)YOKOHAMA, Japan - In less than a year, Nissan has lost its chairman to a financial misconduct scandal; its profits have plummeted; and its ties to Renault, often seen as crucial for its future, have fallen apart. And now, its embattled chief executive is leaving in the shadow of a pay scandal.
The departure of the executive, Hiroto Saikawa, follows months of speculation about his ability to manage the Japanese carmaker since it was rocked by the arrest last year of its former chairman, Carlos Ghosn.
The resignation was announced less than a week after Saikawa said he had received payments from Nissan well beyond his earnings - an admission that echoed the charges that led to Ghosn's fall.
"As the auto industry is facing a big transformation, the question is who should be running the company?" said Nissan's chairman, Yasushi Kimura, speaking at a hastily arranged news conference at Nissan's headquarters in Yokohama. "Replacing the top executive of the company will enable it to be a leader in the auto industry."
After the news conference, once the board members had left, Saikawa stepped into the room and faced the crowd of reporters alone. He apologized for leaving the company before he could fulfill his promise of putting it back on track.
During his tenure, Saikawa said, problems had plagued the company.
"We are seeing a lot of repercussions for what we have done in the past," he said. "I should have clarified and ironed everything out."
The comments seemed more defiant than contrite and expressed some bitterness over his predicament. Over more than 30 minutes, he repeatedly listed his accomplishments at the company, including setting up a new corporate governance system. His largest regret, it seemed, was not continuing on in the position.
The departure takes effect Sept. 16. Nissan is considering a list of 10 candidates for his successor, Masakazu Toyoda, who leads the company's nomination committee, told reporters. A decision is expected by the end of October.
Nissan's chief operating officer, Yasuhiro Yamauchi, will serve as interim chief executive, Toyoda said.
Kimura said that when Saikawa asked the company's board to find his successor as soon as possible, the directors agreed unanimously that "it was better for him to resign immediately."
News of Saikawa's departure came after Nissan's board received a briefing on the results of a nearly yearlong investigation into the company's governance. The inquiry was prompted by Japanese prosecutors' arrest of Ghosn on suspicion of financial misconduct, including underreporting his compensation by tens of millions of dollars. He denies any wrongdoing.
In June, shareholders approved a slate of governance changes, marshaled through by Saikawa, intended to address what it described as an overconcentration of power in the hands of Ghosn, who presided over the company's alliance with Renault and Mitsubishi.
Since Ghosn's November arrest, Nissan's internal inquiry had expanded to include other aspects of the company's business, including the compensation of Saikawa and other top executives.
Speculation that Saikawa would resign had swirled since Thursday's public admission that he and other executives had received unearned compensation as a result of what he described as an error by the company. He was once a loyal deputy to Ghosn who has been withering in his criticism of his former boss since the arrest.
The allegation was first disclosed in June when Greg Kelly, a former Nissan senior executive, accused Saikawa of using a stock-based compensation plan to increase his pay. Kelly has been charged with conspiring to underreport Ghosn's compensation, an allegation he denies.
In a summary of Nissan's internal investigation shared with reporters Monday, the company said that the overpayments to Saikawa totaled more than 47 million yen, or about $440,000, after taxes. Ghosn and Kelly, as well as an additional six directors and executives, also benefited from the stock scheme, which it said had been manipulated by Kelly on behalf of Ghosn without the knowledge of the other beneficiaries.
In his comments Monday, Saikawa admitted that he had asked Kelly to find a way to increase his compensation but said he had not realized the executive would do something "against the rules."
A representative for Ghosn said the accusations that he was involved in the stock-based scheme were "a shameful attempt from Nissan to use Mr. Ghosn as a scapegoat," adding that the company's treatment of Saikawa constituted a "double standard."
A representative for Kelly did not immediately respond to a request for comment.
(STORY CAN END HERE. OPTIONAL MATERIAL FOLLOWS.)
Even before the revelation of the scheme, Saikawa had been fighting an uphill battle to keep his position at Nissan in the face of deteriorating profits and a difficult relationship with Renault. Global vehicle sales were down 6% in the last quarter, insiders said morale at Nissan has plummeted, and top talent has left the company as employees lost faith in Saikawa's ability to lead.
Renault had no immediate response to Nissan's news.
Whether Saikawa's resignation begins a new era between Renault and Nissan remains to be seen. Relations have been fraught since Ghosn's arrest, and tensions over the future of the alliance flared regularly, despite efforts by Renault's chief executive, Jean-Dominique Senard, to cultivate a personal relationship with Saikawa, with whom he said he spoke nearly every day by phone.
A top issue facing Saikawa's successor will be how to strengthen the alliance as the global auto industry rapidly consolidates, with giants like BMW and Daimler cooperating on crucial innovations like autonomous driving technology. Analysts say that only by combining forces can Nissan and Renault afford the huge technology investments necessary to avoid obsolescence.
Renault and Nissan have acknowledged they still need each other to survive and thrive. But Senard told Renault shareholders recently that "a tense climate" reigned between his company and Nissan.
On his way out Monday, Saikawa could not resist taking one last swing at Ghosn and Kelly, whom he blamed for his fate.
"They should feel bad about this," he said. "But they haven't expressed any apology for creating the situation at Nissan. I want Mr. Ghosn and Mr. Kelly to feel bad about this situation that they have created."