RNO Renault SA

By Sean McLain in Yokohama, Japan 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 (July 19, 2019).

Nissan Motor Co. Chief Executive Hiroto Saikawa will face greater scrutiny from the company's new board, two directors said Thursday, adding pressure on the embattled executive to revive the fortunes of the Japanese car maker.

"I know that this board will be very, very matter of fact in terms of the performance of the company," said Jean-Dominique Senard, vice chairman of Nissan and chairman of its largest shareholder, Renault SA.

"We believe we have a check and balance," said Keiko Ihara, one of Nissan's seven independent directors.

Mr. Saikawa faces an uphill battle to restore the car maker's profit margins at a time when the auto industry is grappling with a slowdown in the U.S. and stiffer emissions regulations globally. Nissan's U.S. business, once its biggest source of profit, is now a drag, with its market share taking a hit from Mr. Saikawa's shunning of discounts and sales to rental companies.

Nissan shareholders last month elected a new board with more independent directors and new committees to oversee management. A majority of the company's 11 directors are now independent -- a rarity in Japan where most boards are dominated by executive or close associates of the company.

The overhaul was designed to improve oversight of management, the lack of which Nissan has blamed for the alleged wrongdoing by former Chairman Carlos Ghosn.

Mr. Saikawa is set to face particularly close scrutiny after nearly half of votes cast by shareholders -- excluding Renault -- at a recent meeting favored his ouster. Renault's shareholder agreement with Nissan calls for it to support director nominations.

"Naturally, the confidence vote is the voice of shareholders. All the executive officers are conscious of this," Ms. Ihara said in an interview in Yokohama, Japan, home to Nissan.

"The nomination committee is there to make sure we are making progress and supervise business management, and we will nominate people based on our judgment," Ms. Ihara said.

"No one is putting more pressure on Saikawa than Saikawa himself," said a person close to Nissan. "The priority for management is to restore the business to growth."

Mr. Saikawa succeeded Mr. Ghosn as Nissan chief in April 2017 after a brief stint as co-CEO. Acknowledging investor discontent with his performance, Mr. Saikawa asked the board to come up with a succession plan, while also asking for patience from shareholders to execute a three-year turnaround plan.

Mr. Senard said the board isn't inclined to wait long to see if the plan was working.

"The sense of urgency must prevail," Mr. Senard told reporters at an event in Paris. "My absolute priority is to see how fast this three-year recovery plan can really be implemented."

A person familiar with the Nissan board's discussions said directors had decided to give Mr. Saikawa a year to show progress. "After that, I think we're headed for a major board clash with Saikawa at the center," the person said.

Some board members are concerned about Mr. Saikawa's ability to execute the turnaround and were left unsatisfied after questioning him on the details of the plan, the person said.

Mr. Senard, who succeeded Mr. Ghosn as Renault chairman in January, said Nissan's board should focus on how best to maximize shareholder value within an increasingly challenging auto market.

"Necessity sometimes helps," he said. "What I would like the board to do is to understand all the options that are available on the table, and to examine these options, and to make decisions."

Mr. Senard recently made an overture to Nissan to merge with Renault, before negotiating a merger between Renault and Fiat Chrysler Automobiles NV only to see the deal fall apart -- in part due to resistance from Nissan.

Mr. Saikawa's turnaround plan could take longer than three years, Ms. Ihara said in her interview. In that time Nissan plans to launch new vehicles that it hopes will draw more buyers to dealerships, but it could take longer for profit to rebound.

Some board members are concerned about pressures on Mr. Saikawa's time. He is expected to appear as Nissan's representative at the criminal trial of Mr. Ghosn. Nissan itself is charged with a crime in connection with Mr. Ghosn's alleged financial misconduct. That trial is expected to start next year and last for months.

Mr. Saikawa has also been listed by Mr. Ghosn as a potential witness in an unfair-dismissal suit the former auto executive filed against Nissan and Mitsubishi Motors Corp., according to a person familiar with the matter.

Mr. Ghosn, in the suit filed last month in Amsterdam, alleges his contract as a director of a Dutch entity jointly owned by the two car makers was improperly terminated, and he is seeking damages of up to EUR15 million ($16.84 million), the person said.

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

(END) Dow Jones Newswires

July 19, 2019 02:47 ET (06:47 GMT)

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