November 20, 2018

New York Times – Carlos Ghosn Felt Stars Deserved Big Pay. His Accusers Say He Took That Too Far.

By David Gelles and Motoko Rich

Shortly after Carlos Ghosn took over in 1999 as chief operating officer of an ailing Nissan Motor, he overhauled the way the company paid senior employees.

Abandoning Japanese traditions that rewarded seniority and shunned incentive awards, Mr. Ghosn enforced a performance-based system and gave bonuses to midlevel managers.

The move rankled traditionalists but reflected Mr. Ghosn’s outspoken belief in merit- and market-based recognition. “The highest achievers got the highest rewards,” according to a case study of Mr. Ghosn’s early years at Nissan, which is based in Yokohama.

He earned a reputation as one of his generation’s most successful C.E.O.s, but now the way Mr. Ghosn managed his own rewards may prove to be his downfall.

On Monday, Mr. Ghosn was arrested in Tokyo after a company investigation alleged that he had deceived Japanese financial authorities about his pay package.

According to Tokyo prosecutors, Mr. Ghosn and Greg Kelly, a onetime Nissan human resources manager and current board member, underreported Mr. Ghosn’s compensation between 2011 and 2015 by more than 5 billion yen ($44.5 million). The prosecutors say they declared pay of just under ¥5 billion ($44.3 million), which was half the nearly ¥10 billion ($88.8 million) he actually earned.

Neither man has been charged. Prosecutors have 72 hours to assess the accusations, and they can request an additional 20 days, depending on court approval, to investigate.

Nissan’s board will meet Thursday to consider their removal.

For an executive long lionized in business circles and celebrated by employees, the arrest was a shocking comeuppance. Mr. Ghosn, 64, is credited with turning around two carmakers, Renault and Nissan, and engineering an alliance — with those two companies and then Mitsubishi — that pioneered sharing technologies and cost savings. His life has been chronicled in manga comic books in Japan. He carried the Olympic torch before the 2016 Summer Games in Brazil. At Nissan factories, autograph-seeking employees swarmed him.

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