Good Corporate Governance Principles
Chair and chief executive officer (CEO) roles
should be separate.
Board of directors should provide a
supervisory role.
At least 50 per cent of board members
should be independent.
Transparency: There should be timely and
accurate disclosure of all critical matters.
The external auditor owes a duty of due
professional care to the company.
Practices at Nissan Motor Co., Ltd. ?
Between 2001 to 2017 Carlos Ghosn was
the CEO and chair of Nissan exercising both
the roles. In 2017 he stepped down as CEO
to retain the position of the Chair of Nissan
and was succeeded by Hiroto Saikawa as
the next CEO.
The Board of directors consisted of 1
female and 8 males with 3 directors from
outside the company.
The board should provide a supervisory
role but in case of Nissan the board was not
playing a supervisory role as there was a
statutory audit committee to oversee
appointments of internal auditors
The Board of Directors did not have a
compensation committee nor a nominating
committee thereby Ghosn exercising the
authority to determine compensation of
executives and directors including his own
In the absence of a nominating committee,
Ghosn was responsible for appointment for
the independent board members. Ghosn in
April 2018 appointed two independent
directors without business or management
experience.one was a race car driver and
the other was a Japanese bureaucrat.
As per Exhibit 6 Nissan had 6 independent
board members out of 11 in September
2019
Nissan falsified documents and
manipulated compensation details to
circumvent disclosure of retirement
bonuses and incentive compensation linked
to company stock.
Ghosn compensation was underreported
for 8 years
The independent auditors were local
affiliates of EY ShinNihon LLC, also serves as
a statutory auditor for Olympus corporation
and Toshiba corp., which already
experienced corporate scandals of their

The audit committee should review the
work of internal auditors and the reports of
statutory auditors
Remuneration policy and contracts should
be managed by an independent
remuneration committee
An independent nomination committee
should facilitate and coordinate the search
of qualified board members
There should be a presence of strong
internal controls.
own.
A statutory audit committee was in place to
oversee appointment and functioning and
review of the internal auditors, but a
regular audit committee did not exist to
review the reports of statutory auditors
Nissan Board of directors did not have an
independent remuneration committee.
Starting in 2004 Ghosn was delegated the
authority to determine the compensation
of executives and directors as well as his
own.
Kelly Nissan’s representative director
determined the compensation of the entire
staff except top management
An independent nomination committee
was not in place for finding qualified board
members
Ghosn was responsible for appointment for
the independent board members. Ghosn in
April 2018 appointed two independent
directors without business or management
experience.
Due to this the directors, employees did
not object to Ghosn for fear of losing their
jobs. Minority shareholders had no control
to restrict misconduct by Ghosn or other
Nissan officials
There was an absence of Nomination and
compensation committee
Gosh had the authority to appoint the
company’s independent directors
Ghosn looked after contracts, legal matters
and had authority over all administrative
matters
The disclosure, governance and risk
management issues at Nissan offered
lessons for investors about weak internal
controls.
There should be adequate disclosure of
conflicts.
There should be adequate disclosure of
related-party transactions.
Stakeholders, including individual
employees and their representative bodies,
should be able to freely communicate to
the board of directors their concerns about
any illegal or unethical practices.
Institutional investors should be
encouraged to co- operate and coordinate
with the board.
Pyramid structures, cross-shareholding
plans, and shares with limited or multiple
Conflicts were not disclosed. Auditors who
voiced options about Ghosn’s decisions
were not re-elected.
Starting from 1993, Nisan has suffered
losses for seven years in a row due to poor
marketing, overstaffing, rigid
administration, exhaustive vehicle designs,
and conflicts with labour unions.
Nissan’s corporate vice president Kelly
ordered the confidential purchase of
several real estate properties and explained
that the transactions had to remain
confidential for security reasons. These
properties were used by Ghosn for personal
use
Ghosn used chartered jets and corporate
jets for personal use. Miscellaneous
expenditures exceeded beyond department
budgets and transactions were
preapproved by the CEO which made
questioning them difficult
Auditors who expressed their opinions
about Ghosn's decisions were not re-
elected.
Directors, officers, and employees were
afraid of losing their jobs if they objected or
expressed their own opinions
A common belief among Japanese business
executives was that investing in partners
encouraged trustworthiness and
cooperation in different parts of the value
chain. Therefore, Nissan directed over 4
billion dollars to keiretsu partners from
1990-99
During Ghosn’s tenure as CEO and Chair
minority shareholders have no power to
restrict the misconduct by Ghosn or other
Nissan officials due to absence of a
nominating committee which provided
Ghosn the authority to appoint
independent directors to the board
Nissan's cross-shareholding agreement with
Renault generated yet another corporate
voting rights should be avoided because
these structures can be used to diminish
the capability of non-controlling
shareholders to influence corporate policy.
governance difficulty. Renault owned 43%
of Nissan's stock, with Nissan holding a 15%
non-voting stake in the company. Minority
shareholders have no power to stop the
misconduct by Ghosn or other Nissan
officials