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Nissan and Carlos Ghosn settle SEC claims over undisclosed compensation

WASHINGTON — Nissan and its former Chief Executive Carlos Ghosn have agreed to settle claims from the U.S. Securities and Exchange Commission over false financial disclosures related to Ghosn's compensation, an SEC statement said on Monday. Nissan will pay $15 million, while Ghosn agreed to a $1 million civil penalty and a 10-year ban from serving as an officer or director of a publicly traded U.S. company, the SEC statement said. Ghosn was arrested in Japan and fired by Nissan last year. He is awaiting trial in Tokyo on financial misconduct charges that he denies. Former Nissan human resources official Gregory Kelly agreed to a $100,000 penalty and a five-year officer and director ban. Nissan, Ghosn, and Kelly settled without admitting or denying the SEC's allegations and findings. The SEC said in total Nissan in its financial disclosures omitted more than $140 million to be paid to Ghosn in retirement — a sum that ultimately was not paid. The SEC also accused Ghosn in a suit filed in New York that he engaged in a scheme to conceal more than $90 million of compensation. That suit is being settled as part of the agreement announced Monday. Nissan confirmed it had settled the allegations and said it "is firmly committed to continuing to further cultivate robust corporate governance." Nissan provided significant cooperation to the SEC, the agency said. The company now has a new governance structure with three statutory committees — audit, compensation and nomination — and has amended its securities reports for all relevant years. The SEC said beginning in 2004 Nissan's board delegated to Ghosn the authority to set individual director and executive compensation levels, including his own. The SEC said "Ghosn and his subordinates, including Kelly, crafted various ways to structure payment of the undisclosed compensation after Ghosn's retirement, such as entering into secret contracts, backdating letters to grant Ghosn interests in Nissan's Long Term Incentive Plan, and changing the calculation of Ghosn's pension allowance to provide more than $50 million in additional benefits." "Investors are entitled to know how, and how much, a company compensates its top executives. Ghosn and Kelly went to great lengths to conceal this information from investors and the market," said Stephanie Avakian, co-director of the SEC's Division of Enforcement.

Nissan's big price cuts threatening others' profits

Bloomberg reports Nissan may be keeping the competition up at night even more than normal. The Japanese automaker recently cut prices on seven of its models and bolstered incentive offerings in an attempt to gain market share in the US, and the strategy is working. Last month saw the company's sales leap by 25 percent, which is nearly triple the industry average. Nissan is currently taking advantage of the weak yen - Japanese currency has fallen by 15 percent against the dollar, which has given the automaker around $1,500 per car to use to either add features or cut prices. Some analysts are calling the policy "scorched earth."
Meanwhile, American automakers like Ford, General Motors and Chrysler are doing their best to keep from sliding back into old bad habits. The Detroit Three have steadily moved away from a discount and incentive strategy to bring in new buyers since the 2009 recession. Those short-sighted tactics helped paved the way for bankruptcy at both GM and Chrysler. As Bloomberg reports, the resolve to stay away from big discounts may falter if Toyota begins using similar tactics.

Japan issues arrest warrants for Ghosn, Americans suspected of helping him escape

This security camera image shows men identified as Michael Taylor and George Zayek during their checkpoint processing at the Istanbul Airport in Istanbul, Turkey. They are suspected of smuggling Carlos Ghosn out of Japan to Lebanon via Istanbul.   TOKYO — Tokyo prosecutors issued an arrest warrant Thursday for Nissan's former chairman Carlos Ghosn, who skipped bail while awaiting trial in Japan and is now in Lebanon. Japan has no extradition treaty with Lebanon, so he's unlikely to be arrested. Lebanon has indicated it will not hand over Ghosn. Tokyo prosecutors also issued arrest warrants for three Americans they said helped and planned his escape, Michael Taylor, George-Antoine Zayek and Peter Taylor. Deputy Chief Prosecutor Takahiro Saito declined to say where the three men were thought to be staying. He said Michael Taylor and George Zayek are suspected of helping Ghosn flee by hiding him in cargo at a Japanese airport and getting him into a private jet to leave the country. Saito would not say if Japan has asked U.S. authorities for help, though he said all options were being explored. Japan and the U.S. have an extradition treaty. Michael Taylor is a former Green Beret and private security specialist. Peter Taylor appears to be his son. Security footage released earlier showed Zayek and Taylor transiting Istanbul Airport at the same time Ghosn allegedly passed through Turkey on his way to Beirut. Prosecutors suspect Peter Taylor met several times with Ghosn in Tokyo, starting in July last year, to plot his escape. Saito said Ghosn was given a key to a hotel room in Osaka near the Kansai Airport that Ghosn left from. Prosecutors say Ghosn broke the law by violating bail conditions that required him to stay in Japan, mostly at his Tokyo home. “We want to stress that the act of fleeing was clearly wrong,” Saito told reporters. “We need to erase the misunderstanding.” Separately, Saito said prosecutors on Wednesday forced open a lock to search the Tokyo office of Ghosn's former defense lawyer Junichiro Hironaka for records of people Ghosn met with while out on bail, and other materials. Prosecutors are asking a judge for help in accessing contents of a computer Ghosn used at Hironaka's office that the lawyer has refused to hand over, citing attorney-client privilege. Ghosn has said he is innocent of allegations he under-reported his future income and committed a breach of trust by diverting Nissan money for his personal gain.