How Ghosn hid $140 million in compensation from Nissan
TOKYO: The settlement between the Securities and Exchange Commission (SEC), and Nissan Motor Co. and Carlos Ghosn offers a rare glimpse into the steps that were taken to make sure more than $140 million paid to the ex-chairman wasn’t disclosed publicly.
That’s because many of the claims against Nissan and Ghosn haven’t been detailed in public documents in Japan. The charges against Nissan, Ghosn and Greg Kelly, the other ex-nissan executive charged with financial crimes, don’t offer specifics, and their trial isn’t due to start until next year. Ghosn also faces charges in Japan related to money flows in the Middle East.
In the SEC settlement, Nissan was fined $15 million over the allegations, while Ghosn, 65, was hit with a $1 million penalty, the SEC said in a statement Monday. “We are pleased to have resolved this matter in the US with no findings or admission of wrongdoing,” Ghosn’s defense team said, adding that they will “vigorously fight the criminal case in Japan and pursue his claims against Nissan around the world.”
Nissan, based in Yokohama, said in a statement that it cooperated fully with the SEC.
Even so, the SEC’S complaint offers the clearest picture yet of some of the alleged methods used by Ghosn, Kelly and Nissan to hide compensation and payments made to the fallen auto titan. Here are some of key
details:
DISCLOSURE RULES Because of an impending change in Japan’s disclosure rules in 2009 for corporate directors, “Ghosn became concerned about criticism that might result in the Japanese and French media if his total compensation became publicly known,” the SEC said.
Every year from 2011, a senior employee “would prepare for Ghosn’s approval a document summarising Ghosn’s total fixed compensation, his paid compensation that was being disclosed, and his remaining compensation that was not paid and was not being disclosed,” the complaint said. About $94 million of Ghosn’s undisclosed compensation was determined in this manner, the agency said.
PAYOUT METHODS
In order to pay out the undisclosed compensation, “Ghosn and his subordinates sought multiple ways to pay his undisclosed compensation through Nissanrelated entities without disclosure,” the complaint said.
While they considered paying this out using Nissan subsidiaries, they instead decided to postpone the payments for a later undisclosed date, according to the agency.
The total remuneration, paid remuneration and postponed remuneration were tracked each year in a spreadsheet, according to the SEC.
A Nissan employee “showed or provided to Ghosn the reports he prepared each fiscal year to set Ghosn’s total, paid, and postponed compensation, as well as the spreadsheets he maintained and updated each year that tracked the same information,” the complaint said.
BOOSTED RETIREMENT Separately, Ghosn used another method to increase his compensation: boosting his retirement allowance by more than $50 million, according to the SEC.