Hiroto Saikawa is coming under intensifying pressure as chief executive of Nissan as he faces a potentially damning appraisal from minority shareholders at the company’s annual meeting later
this month, said people close to the car maker.
The assessment came as two of the largest proxy voting services recommended investors vote against Mr Saikawa’s re-election as a director at the meeting on June 25. People close to Nissan said Mr Saikawa was likely to gain the backing of Renault and its 43 per cent stake for technical reasons, but suspect he would lose the support of a majority of the remaining shareholders. One of these people said Mr Saikawa was on “borrowed time” as chief executive.
Proxy voting services Institutional Shareholder Services and Glass Lewis based their arguments on Mr Saikawa’s long association with Carlos Ghosn, the former Nissan chairman who was arrested in November and is awaiting trial in Tokyo on charges of financial misconduct that he has consistently denied. In order to secure his reappointment, Mr Saikawa requires at least half of voting shareholders at Nissan’s annual shareholders’ meeting to decide in his favour.
The recommendations of proxy voting services in Japan have taken on a far greater resonance following Tokyo’s efforts to foster greater attention on governance by institutional investors. Asset managers, especially those with mandates from the Government Pension Investment Fund, are under greater pressure to vote their shares and to explain their decisions.
In a letter to investors this week, ISS said that owing to Mr Saikawa’s protracted stint on the Nissan board and because he has long been regarded as one of Mr Ghosn’s closest allies, it would be difficult to consider him totally unconnected to Mr Ghosn’s alleged wrongdoing.
ISS said Nissan had built a corporate culture that reflected Mr Ghosn’s “effective dictatorship”. “In order to break from the past, the company needs to build a strong board with fresh members. Given the fact that Mr Saikawa has been on the board for 14 years, and worked closely with Mr
Ghosn, Mr Saikawa’s appointment to the board is not considered appropriate,” the letter said.
The letter noted that Mr Saikawa, who has not been charged by Japanese prosecutors, had signed off on Mr Ghosn’s controversial retirement package — just one example casting doubt over Nissan’s contention that Mr Ghosn “is entirely wrong and Nissan is only a victim”, ISS said.
In a separate recommendation, Glass Lewis wrote a scathing criticism of Nissan’s poor internal controls and weak risk management, and said it could not support Mr Saikawa’s reappointment as president because he “should have taken greater steps in performing its [the company’s] oversight responsibilities in the misconduct of the board members”.
Nissan declined to comment on either recommendation. The calls to vote against Mr Saikawa’s reappointment come as the Nissan chief is struggling to rescue the Japanese car maker from years of dismal governance, a quality control scandal and declining financial performance.
