HONG KONG - Hiroto Saikawa has overstayed his welcome at the wheel of Nissan Motor . He and other executives may have padded their pay, Reuters reports. The figures at stake appear small compared to allegations levied against ousted boss Carlos Ghosn, but it hardly matters. Saikawa has neither rebuilt credibility nor fixed performance at the $25 bln carmaker. Investors have no cause to remain patient.

Saikawa never won any popularity contests at Nissan. Still, some hoped he might serve as a decent caretaker after Ghosn was arrested, accused of financial misconduct by Japanese prosecutors. The Franco-Brazilian former chairman denies the charges, but the affair destabilised an already rickety relationship with alliance partner Renault. Now, Nissan's audit committee has discovered Saikawa and other executives received excess stock-related compensation. Japanese media reported that Saikawa admitted as much, blamed it on "the Ghosn Era" and promised to pay it back. The results of the investigation are due to be presented to the board of directors on Sept. 9.

The bad behaviour is a body blow to Saikawa's authority, as he oversees an overhaul of Nissan's corporate governance. Investors might have been inclined to overlook it, had business been otherwise good. Unfortunately, he has repeatedly underestimated how bad things are. While he told investors in May that performance had hit "rock bottom", in July he proved it wasn't. Net income fell to just 6.4 billion yen ($59 million) in the three months ending in June, down around 95% from the same period the previous year, while operating margin fell from 4% to 0.1%. Many of his strategic changes, meanwhile, have been questionable: headcount reductions, for example, were nearly all in overseas markets that are growing faster than Japan is. Nissan was supposed to return to the bond market today to raise nearly 250 billion yen ($2.4 billion), a long-awaited sign of normalisation. That has now been postponed, according to DealWatch.

In the immediate aftermath of the scandal, there was a case for letting Saikawa deal with the worst of the fallout, push through painful strategic changes in the U.S. market, announce big layoffs and clear the way for a successor. For better or worse, that phase is complete. He has promised to resign once transition work was done: shareholders will hold him to that sooner rather than later.

CONTEXT NEWS

- An internal probe at Nissan Motor determined that Chief Executive Hiroto Saikawa and multiple other executives received excess stock performance-related compensation in violation of company rules, Reuters reported on Sept. 5, citing a source with direct knowledge of the matter. The source said the misconduct was disclosed at a meeting of Nissan’s audit committee, a day earlier.

- Jiji news agency reported on Sept. 5 that Saikawa acknowledged the overpayment, adding he would return the portion he wrongfully received. Nissan has not commented.

- In an interview with Bungei Shunju magazine in June, former Nissan director Greg Kelly said Saikawa was granted an exception in 2013 to reschedule a stock-linked bonus, bumping up the payout by 47 million yen ($445,962).

- Nissan Motor will postpone a four-tranche domestic bond offering that was scheduled to price on Sept. 5, DealWatch, IFR’s sister publication in Japan reported. Nissan had planned to raise about 250 billion yen, according to the report.

(Editing by Clara Ferreira Marques, Katrina Hamlin and Sharon Lam)

© Reuters News 2019