By Sean McLain
YOKOHAMA, Japan -- Nissan Motor Co. Chief Executive Hiroto Saikawa is resigning, ending a term marked by controversy over the arrest of former Chairman Carlos Ghosn, turmoil with partner Renault SA and a sharp falloff in profits.
Nissan's board sought to remove Mr. Saikawa quickly after a company investigation found that in 2013, Mr. Saikawa, then an executive vice president, received improper stock-based performance compensation of about $439,000. The company said Mr. Saikawa asked colleagues to explore ways to increase his compensation, and employees subsequently falsified documents to increase his performance pay. Nissan identified some of his actions as inappropriate but didn't classify them as misconduct.
"We believed immediate action was appropriate," said Nissan director Yasushi Kimura, adding that the vote was unanimous.
Nissan's board said Chief Operating Officer Yasuhiro Yamauchi would take over as acting CEO on Sept. 16. The board said it aimed to select a permanent CEO by the end of October.
The consensus to replace Mr. Saikawa, 65 years old, came after a long debate over the timing of his departure, said a person familiar with the discussions. Some directors wanted to have Mr. Saikawa stay until a permanent successor was chosen, the person said.
Ultimately, those in favor of Mr. Saikawa's immediate departure won out, arguing that the board's reputation would be harmed if it was viewed as putting off difficult decisions, the person said.
Maintaining the board's independence from management has been a key goal in Nissan's governance overhaul, which includes a large crop of new outside directors installed at the company's annual shareholder meeting in June.
Nissan has said Mr. Ghosn's alleged misconduct went unnoticed in part because the prior board didn't provide adequate oversight and rubber-stamped management decisions.
Pressure had been building on Mr. Saikawa to depart after shareholders at the annual meeting in June gave him relatively weak support and losses mounted.
Mr. Saikawa's admission last week that he had received excessive pay through his stock-based performance compensation added to that pressure. Former Nissan director Greg Kelly, one of Mr. Ghosn's co-defendants, mentioned the pay issue in an interview with a Japanese magazine in June.
In 2013, the execution date of Mr. Saikawa's stock appreciation rights -- a cash payment based on the increase in share value over a certain period -- was moved one week after the actual exercise date, resulting in the excess payment because the stock price had moved during that week, Nissan said.
Motoo Nagai, the head of the audit committee, said the board found no evidence that Mr. Saikawa asked for the improper pay but that Mr. Saikawa had acted inappropriately by delegating the task of setting the date for his share-appreciation rights.
Mr. Saikawa said at a news conference Monday that he was leaving earlier than he had intended. He said he didn't know about any improper handling of his stock-based compensation and would return the excess pay.
Mr. Ghosn's U.S. lawyers at Paul, Weiss, Rifkind, Wharton & Garrison said after the board's decision that Nissan's position was "contradictory and incoherent." They didn't elaborate.
Junichiro Hironaka, a lawyer for Mr. Ghosn in Japan, said last week that while Mr. Ghosn is accused of hiding compensation that he never received and is facing a lengthy prison sentence as a result, Mr. Saikawa did receive excess pay and isn't facing criminal charges.
Mr. Hironaka called this "clear discrimination against foreigners."
One of the charges against Mr. Ghosn involves deferred compensation that prosecutors said he was obligated to report in Nissan financial statements. Mr. Ghosn has said he discussed such compensation as a possibility but that nothing was ever decided and he didn't have to report it.
Mr. Saikawa leaves a company whose business is hammered by falling sales and profit, and whose relationship with partner Renault is weighed down by disagreements over the future of their alliance.
"I should have ironed out everything and then handed over the baton to a successor, but I couldn't finish everything," Mr. Saikawa said at the news conference.
Independent directors said they had compiled a list of 10 internal and external CEO candidates. The list has been narrowed down to six people, a person familiar with the board's discussions said.
Renault and Nissan are in the initial stages of discussions about reshaping the shareholding structure that has bound their alliance. Nissan has long said it wanted a more balanced structure. Renault owns 43.4% of Nissan, while Nissan owns a 15% nonvoting stake in Renault.
Talks have stalled over a disagreement about how much of its stake Renault should sell, a person familiar with the talks said. Renault wants to retain a stake above 34%, which is considered a controlling stake in Japan, while Nissan prefers a lower figure, the person said.
Mr. Ghosn led the company for nearly two decades but was stripped of his Nissan posts after his arrest in November. He faces trial next year in Tokyo on charges of financial crimes. He has said he is innocent of all the charges.
Mr. Saikawa, who took over as chief executive in 2017, had faced criticism for failing to stop what Nissan has described as Mr. Ghosn's abuses of power. Mr. Saikawa has also come under scrutiny for Nissan's dismal business performance. The company said in July that it would cut 12,500 jobs, or 9% of its global workforce, after profit in the April-July quarter dropped 98.5%.
The U.S. accounts for a big part of the problem. After ramping up discounts and low-margin sales to rental-car companies to lift volume in the U.S., Nissan pulled back in a bid to raise profitability. Factories operated short of capacity as the auto maker struggled to sell vehicles.
Mr. Saikawa joined Nissan out of college in 1977 and was sometimes called a "space alien" or "cyborg" within Nissan for his Spock-like personality. When Mr. Ghosn arrived at Nissan in 1999, he turned to Mr. Saikawa, an English-speaking graduate of the University of Tokyo, to carry out radical change.
Mr. Saikawa helped Nissan and Renault cut costs through sharing of parts but largely stayed behind the scenes, leaving the charismatic Mr. Ghosn to serve as the public face of the company until his arrest.
The acting CEO, Mr. Yamauchi, is 63 and has worked at Nissan since 1981. He also has extensive experience in parts purchasing and worked with Renault in that area.
--Nick Kostov in Paris contributed to this article.
Corrections & Amplifications Nissan Motor Hiroto Saikawa will step down effective Sept. 16. An earlier version of this article incorrectly said his resignation would be effective Sept. 15. (Sept. 9, 2019)
Write to Sean McLain at email@example.com