RNO Renault SA

By Sean McLain in Tokyo and Nick Kostov in Paris 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 20, 2019).

Nissan Motor Co. and Renault SA have resolved a standoff over corporate governance at the Japanese car maker, according to people familiar with their talks, easing tensions that had scuttled the French car maker's merger talks with Fiat Chrysler Automobiles NV.

The detente allows Nissan to install a new board, a step that Renault executives see as allowing for the possible resumption of merger talks with Fiat Chrysler, according to a person close to Renault. Those discussions foundered as Nissan withheld its support for a tie-up and the French government asked for a delay until Nissan was on board -- prompting Fiat to pull its offer.

Renault executives would like to revive talks with the Italian-American car maker in the near future before market conditions change, this person said.

Renault and Nissan hold stakes in each other under an auto-making partnership that stretches back two decades. French President Emmanuel Macron is expected to discuss the alliance when he meets with Japanese Prime Minister Shinzo Abe next week at the G-20 meeting in Japan.

The corporate-governance issue spawned a highly technical, yet high-profile, standoff between Nissan and Renault. It revolved around whether Renault Chief Executive Thierry Bolloré should be given a post on an audit committee proposed for Nissan's board. Renault threatened to abstain in a vote on governance changes at Nissan, effectively thwarting them, unless Mr. Bolloré was seated. That prompted Nissan Chief Executive Hiroto Saikawa to issue an uncharacteristic rebuke of Renault, calling its stance "most regrettable."

Under the recent agreement, Mr. Bolloré would get the committee seat, said people familiar with the discussions. One of Nissan's independent directors, Masakazu Toyoda, had communicated the offer to Renault Chairman Jean-Dominique Senard in writing, said one of the people.

Nissan wants to create three new board committees -- for audit matters, director nominations and executive compensation -- to address governance problems that the auto maker has said allowed alleged wrongdoing by former Nissan Chairman Carlos Ghosn to go unnoticed by company watchdogs. Shareholders are set to vote on the plan at the annual Nissan shareholder meeting June 25. It requires a two-thirds majority to pass, and Renault's support is essential.

At Renault's shareholder meeting last week, Mr. Senard said that the argument involved "a fundamental detail," but that there was no need to "cause an eruption of Mount Fuji."

Nissan had already agreed to put Mr. Senard on the new nomination committee, but he said that wasn't enough. "We have two Nissan representatives sitting on Renault committees, and I thought the least we can do is have two Renault representatives sit in Nissan committees," Mr. Senard said. "I could not very well vote in favor of a change in governance unless that very simple condition be respected from the start."

The Japanese car maker had sought to keep Mr. Bolloré off the audit committee because it thought his role as Renault's most senior executive might conflict with the committee's job of checking that Nissan's business plans were in the Japanese company's best interests.

The conflict-of-interest risk was hypothetical, but it worried Nissan after an outside committee tapped to review lessons of the Ghosn case said Nissan should avoid the appearance of conflicts of interest, said people familiar with the talks. Mr. Ghosn was chairman of both Nissan and Renault, as well chief executive of Renault and of a separate company dealing directly with the alliance's operation.

Since Mr. Ghosn's arrest and indictment, Nissan and Renault have clashed about aspects of the investigation into his alleged wrongdoing and over the future shape of the alliance. Before contributing to the failure of the talks between Renault and Fiat Chrysler, Nissan fended off a plan to merge with Renault.

Mr. Senard said last week that Renault has lost influence in the alliance since a 2015 revision to its shareholding agreement with Nissan, which limited the ability of Renault to exercise its voting rights.

"I won't be the chairman who will lead to a further reduction of Renault's influence in the alliance, because I don't think that would be acceptable," Mr. Senard told shareholders.

Write to Sean McLain at sean.mclain@wsj.com and Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

June 20, 2019 02:47 ET (06:47 GMT)

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