Nissan, Ghosn settle SEC claims
NEW YORK/ SOUTHFIELD, Mich. • Nissan Motor Co. and Carlos Ghosn settled a U. S. regulators’ claims that they failed to disclose more than US$140 million in pay to the embattled ex- chairman, one of the first legal accords in a saga that has put the automaker on its heels and tarnished the reputation of a business icon.
Nissan was fined US$ 15 million over the allegations, while Ghosn, 65, was hit with a US$1 million penalty, the Securities and Exchange Commission said in a Monday statement.
The SEC said the Japanbased automaker granted Ghosn broad authority over the company’s pay decisions, with the startling power to set compensation for himself, other executives and directors. That ultimately led to Ghosn — with substantial assistance from his subordinates — excluding more than US$ 90 million in his own pay from Nissan’s public statements to investors. Ghosn additionally took steps to increase his retirement allowance by US$ 50 million, according to the regulator.
The SEC also reached a settlement with former Nissan director Greg Kelly, who agreed to pay a US$100,000 fine over allegations that he helped hide Ghosn’s pay. Ghosn was barred from serving as a director or officer of a public company for 10 years, while Kelly agreed to a five-year ban. Nissan, Ghosn and Kelly, 63, all resolved the cases without admitting or denying wrongdoing.
Nissan, based in Yokohama, said that it co- operated fully with the SEC and has “promptly implemented remedial acts to prevent recurrence.” The company laid blame on Ghosn and Kelly, saying the executives’ alleged misconduct “serves as the basis for Nissan’s liability.”
Lawyers for Ghosn and Kelly said the decision to settle with the SEC should have no bearing on separate Japanese cases against their clients.
“Greg is a guy with limited resources,” said James Wareham, an attorney for Kelly. He said his client settled so that he can concentrate on the case he faces in Japan.
Attorneys for Ghosn said they were pleased to put the SEC matter behind them.
Nissan shares trade in the U. S. via American Depositary Receipts, which generally gives the SEC enforcement authority although the alleged improprieties took place mostly in Japan and Europe.
Ghosn’s decision to conceal his pay stemmed from a 2010 Japanese rule that forced executives to disclose their total compensation. Instead of complying — and risking negative media coverage — Ghosn crafted various strategies to obscure how much he received from Nissan, according to the SEC. Tactics included entering into secret contracts, backdating letters granting himself cash bonuses and manipulating his pension allowance, the regulator said.
Ghosn and Kelly face trials in Japan stemming from their alleged roles in masking pay. Japanese prosecutors also have accused Ghosn of transferring personal losses to Nissan and using company funds for financial transactions in the Middle East.