Nissan directors say reforms, job cuts are coming

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YOKOHAMA, Japan – The newly tapped directors to strengthen corporate governance at Nissan promised to turn the Japanese automaker’s ailing business around but said Wednesday that extensive job cuts designed to drive a recovery are also coming.

Nissan’s brand image has been battered by the financial wrongdoing scandal of former Chairman Carlos Ghosn, who is awaiting trial in Japan.

Motoo Nagai, a former banker and a new outside director overseeing audit, told reporters Wednesday the job cuts will be announced this week under a new scenario to drive growth.

Japanese media have reported that Nissan Motor Co. will slash 10,000 jobs. Nagai did not give details.

“This is not a simple job reduction but designed for a big jump,” he told reporters at the company’s Yokohama headquarters.

Ghosn, who led Nissan for two decades, is awaiting trial on allegations of under-reporting future compensation and having Nissan shoulder his investment losses. He has repeatedly said he is innocent.

Nissan restructured its board and management team in March, adding outside directors, after Ghosn was arrested in November. The directors’ appointments to head various governance committees, to oversee compensation, nomination and audit, won shareholders’ approval in June.

The directors have said that the concentration of power in Ghosn led to the wrongdoing and have acknowledged that governance checks at Nissan had lagged. But they stressed that their efforts had just begun.

“We need to set up a solid corporate governance structure but also make sure it is put it into practice,” said Yasushi Kimura, chairman of the board, stressing that transparency and fairness were critical. Kimura previously served as a consultant at an oil company.

Other governance directors are Masakazu Toyoda, an academic and outside director overseeing executive nominations, and Keiko Ihara, a race-car driver and outside director overseeing compensation. Both were Nissan directors from last year but are newly appointed to the governance positions.

Toyoda said it was important to build a succession in management and strengthen Nissan’s alliance with French automaker Renault SA and smaller Japanese automaker Mitsubishi Motors Corp.

Nissan’s financial results have tumbled since the Ghosn scandal. The company reports its fiscal first quarter earnings on Thursday.

The directors acknowledged that Nissan’s U.S. operations suffered from a mistaken strategy that pursued maximizing sales volume, relying on incentives and fleet sales, or rentals. They also said reassuring shareholders and the public that Nissan had proper governance was important for overall operations.

“Our job is to make sure management can focus on the auto business,” Nagai said.

The company’s relationship with Renault also has been questioned in the absence of Ghosn, as he was sent by Renault to help turn around Nissan in the late 1990s and had worked to bring together the alliance.

Ghosn was released on bail in April after spending 130 days in detention. It’s unclear when his trial will start as it is common in Japan for trial preparations to take many months. Ghosn has been ousted from Nissan’s board, and he has resigned from the board of Renault.

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