Landmarks since Ghosn’s arrest


Renault’s Annual General Meeting will be held on 12 June at 3pm at the “Palais des Congrès” in Paris. Renault’s stock price decreased by 34% since the previous General Meeting in 2018 and investors now realize the significant role of Governance and its consequences. This is an occasion for us to backtrack on the Ghosn affair, how the crisis was managed and on the most recent events. 


On Monday, November 19, 2018 Carlos Ghosn, Chairman-CEO of Renault and Chairman of Nissan and Mitsubishi, was arrested in Japan. That day Renault stock price dropped by 8.43% (1.6 billion euros of market capitalization). Nissan Motor revealed that Carlos Ghosn and director Greg Kelly had for years reduced the compensation to be declared to the Tokyo Stock Exchange in their regulatory filings. Japanese prosecutors have accused Carlos Ghosn of falsifying Nissan's annual reports through an underestimation of his pay by about 10 billion yen (c. 73 million euros) over ten years. Nissan reported that various post-employment compensations were never disclosed. Nissan Motors also revealed "significant acts of misconduct" including the personal use of company assets.

On Thursday, November 22, Carlos Ghosn was removed from his position as Chairman of Nissan and was replaced by Hirito Saikawa, the company's CEO, on a temporary basis.

Few days later it was revealed that Nissan Motors' auditor, Ernst & Young ShinNihon, a partner in the global EY network, had questioned Nissan's management several times since 2013 about various transactions including the acquisition and the renovation of luxury residences abroad (Rio, Paris, Amsterdam, Beirut) by a Dutch subsidiary of Nissan with cash of 70 million euros, Zi-A Capital BV. According to Reuters, a residence was acquired in Lebanon in 2012 for 9.5 million dollars and then renovated for 7.2 million dollars.

A third complaint was added on December 21 by Japanese prosecutors who accused Carlos Ghosn of having transferred some personal investment trading losses on Nissan's accounts.



According to Proxinvest, this governance crisis has been fairly well managed by Renault.

November 20, 2018:

The day after the arrest of Carlos Ghosn, a board of directors met and adopted transitional measures of governance by appointing Mr. Thierry Bolloré as temporary deputy CEO (“Directeur général Délégué”) and by deciding to meet regularly under the chairmanship of the lead independent director, Philippe Lagayette during the impeachment of Carlos Ghosn. Although Philippe Lagayette has a strong responsibility for the lack of control of Carlos Ghosn by Renault's board of directors, this transitional crisis measures were welcome.

January 24, 2019:

The resignation of Carlos Ghosn as Chairman of the Board and Chief Executive Officer was obtained. The Board of Directors then decided to split the roles of chairman of the Board and CEO. Renault Board of Directors appointed Jean-Dominique Senard as new director and new Chairman of the Board and Thierry Bolloré was appointed Chief Executive Officer. Following the behavioral excesses of Carlos Ghosn that Proxinvest denounced for many years, it seems that Jean-Dominique Senard has the right profile to restore the trust of Renault stakeholders (strategic partners like Nissan, employees and shareholders), and to implement a stronger ethical exemplarity at the top of the group (see agenda item 8).

February 13, 2019:

The board of directors decides not to activate the non-competition clause (indemnity). Carlos Ghosn will also lose any right to shares granted over the period 2015-2018 and to any annual bonus deferred in shares.

April 3, 2019:

The Board of Directors acknowledges the resignation of Carlos Ghosn as Director on the date of the 2019 Annual General Meeting. A new director was announced in order to compensate for the lack of expertise of the Board in the automotive sector (Annette Winkler, resolution 9). The Board of Directors informs that performance targets for the FY2018 annual variable remuneration were met but recommended to the shareholders to reject this remuneration of EUR 224,000 (cash portion of the annual bonus) by voting against the agenda item 10. Indeed, in accordance with the ex-post binding vote introduced by the Sapin 2 Law, such variable remuneration has to be approved by the general meeting of shareholders before being paid. Lastly, the Board notes that Carlos Ghosn lost his pension rights following his resignation. The board finally asks the auditors in charge of the special audit of the joint-venture of Renault and Nissan RNBV (including Mazars as external audit firm) to give their conclusions as soon as possible.

The Board of Directors confirms that the audit conducted by the Ethics and Compliance Department of Renault concluded that the remunerations paid to the executive committee members over 2010-2018 were compliant with the legal and regulatory framework. However, the Board noted that expenses incurred by the former Chairman and Chief Executive Officer were questionable (communication published by the Board of Directors on Renault’s website).



Following the revocation of Carlos Ghosn as Chairman of Nissan, he will still be on the Board of Directors until the General Meeting on 8 April 2019. The Meeting will nominate Jean-Dominique Senard to replace Ghosn. Thierry Bolloré will also be proposed as Director at the next General Meeting of Nissan Motors as representative of Renault.

March 27, 2019:

An external panel of experts came to conclusion a vitriolic report against the Carlos Ghosn’s governance and Nissan, blaming a corporate culture that deified him, a cult of personality and a concentration of power in his hands. The panel considers that the facts that were noticed are sufficient to suspect a violation of several laws, regulations and internal rules as well as a personal use of the assets and expenses of the company. The report blames Ghosn and Kelly of a lack of morality and ethics, a culture, including at the board level, where no one could object, brief board meetings and the same Auditors frequently re-appointed whereas the EU Regulation on specific requirements regarding statutory audit of public-interest entities (537/2014/EU) calls for the implementation of a ten-year audit firm rotation.

The report also blames ineffective authority schemes since Carlos Ghosn deliberately made some departments opaque and hard to understand. The report accuses Carlos Ghosn of paying fees to his sister for services that were never provided, using Nissan's private planes for personal uses. Carlos Ghosn’s Spokesman denounces a campaign in order to inhibit a stronger integration of the Alliance, in a context where Nissan's performance is deteriorating. The recommendations of the Governance Committee (Chairman not related to management or Renault, majority of external directors, creation of audit committees, remunerations and appointments) will all be implemented during Nissan’s Annual Meeting.

April 12, 2019:

First meeting of the operational council of the Alliance. The members of the Alliance have decided to put to sleep the Renault-Nissan BV, to incorporate Mitsubishi in the Alliance and apply an Alliance Board composed of the three CEOs of Renault, Nissan and Mitsubishi and chaired by Renault's new Chairman of the Board, Jean-Dominique Senard, with the main objective of making joint decisions on a consensual basis.

May 15, 2019:

Profit warning; Nissan announces that its operating income should fall to 230 billion yen (-28%) for the year ended March 2020. This announcement could have an impact of about 20% on the results of Renault.

May 17, 2019:

Nissan announces a "strengthening of its governance" by establishing 3 specialized Committees and changes on the board, which will now include 7 out of 11 external directors. We note the departure of the former directors representing Renault (Mr. Duzan and Mr. Rey), the arrival of Bernard Delmas (President of Nihon Michelin Tire in Japan and President of the France-Japan CCI from 2010 to 2018), the departure of two former Nissan CEOs or former senior executives, Mr. Sakamoto and Mr. Shiga, the arrival of two Americans, lawyer Jenifer Rogers and Andrew House (American, former video game executive at Japan's Sony Corp.). The chair of the board will no longer be a Nissan executive. Hirota Saikawa is expected to be re-appointed as Nissan's CEO.

Despite the rumors of a merger project via the creation of a joint holding company, an intention that Nissan seems to have rejected so far, the Renault-Nissan agreement (RAMA) is unchanged and still raises doubts concerning the unfortunate agreements in December 2015 that led Renault to abandon exercising its free voting right at Nissan's general meeting, despite holding 43% of Nissan’s capital.

More recently, the alliance has suffered a setback with Nissan's weak position regarding the merger with Fiat Chrysler. At board meetings, Nissan’s representatives on Renaut's board refused to support the proposed merger.

A week before the general meeting, the media announced that they have obtained the letter sent by Jean-Dominique Sénard to Nissan’s management. Jean-Dominique Sénard announced that Renault no longer wishes to vote in favor of resolutions allowing changes in governance. In fact, Nissan will propose changes in governance, more specifically the creation of three committees. These committees will also help to avoid overflows observed with the accusations against Carlos Ghosn. However, Nissan is currently refusing to appoint Thierry Bolloré, current Renault CEO, to the Audit Committee.



A governance scandal such as the Ghosn affair impacts negatively the company’s reputation, market confidence and firm’s value. Renault board of directors was unable to act as a responsible shareholder of Nissan and of RNBV. The Board also failed to properly listen to shareholders concerns over Carlos Ghosn pay practices (Proxinvest has always recommended to oppose Carlos Ghosn remuneration since the introduction of the Say On Pay in France in 2013 and the Say On Pay approval rate has never been beyond 64%). Renault was also well-known for its high corporate governance risk and was ranked in the lowest decile of our corporate governance rating over the last three years with a grade D.

Neither the directors representing the French State, nor the employee representatives, nor the independent directors and the directors representing Nissan succeeded in the implentation of proper controls and checks and balances. Many former directors failed, among them some well-known personalities of the French business establishment: Marc Ladreit de Lacharrière, longtime Chairman of the Remuneration Committee, appointed director in 2002, Franck Riboud appointed in 2000, Dominique de la Garanderie appointed in 2003, Charles de Croisset, Thierry Desmarest appointed in 2008, Alain Belda named in 2009, etc...

Cherie Blair will not be renewed as director which is a welcomed development. She was sitting next to Carlos Ghosn during his Versailles anniversary paid by Renault-Nissan. The departure of the lead independent director, Philippe Lagayette, is also justified since he failed many times in his senior role at Board level. We note that Patrick Thomas, former chair of the remuneration committee, remains on Board which may raise concerns. The other directors started their mandate over the last years and are less responsible for the governance crisis of Renault and Nissan.



Renault's Board of Directors met on May 27, 2019 to consider a friendly merger proposal made by FCA (Fiat Chrysler). The proposal has not yet been approved by the Board of Directors but the French State does not object at this stage. Specific governance arrangements are not detailed or secure at this stage.

In Bruno Le Maire’s interview, Minister of the French Economy, he asked 4 questions:

  • The implementation of the operational headquarters in France;
  • That the French state has a registered office in the new entity;
  • Not close any factories on French territory;
  • And the agreement of his Japanese partner, Nissan, on this merger.

Proxinvest has estimated that the valuation made by Fiat Chrysler does not match to the real value of the Renault company. As soon as this merger proposal was announced, Proxinvest raised questions regarding the valuation made by Fiat Chrysler about Renault, which does not take into account the historical methods of stock-exchange, valuation by the sum of the parties, or to seem to value low investments of FCA during the last five years, the advance comparative and investments of Renault in electric vehicles and in the reduction of CO2 emissions per km traveled in its vehicles.

The council met for the first time on Tuesday June 04, 2019, to discuss the proposed merger with Fiat. However, the council decided to postpone the vote for the first time to the next day, postponed again at on the request of the representatives of the French State.

However, before Renault’s board could agree on this project, the Fiat Chrysler Group decided to withdraw the merger offer. The company argues the fact that the current political conditions in France do not allow this merger project to succeed.

This twist is certainly not the last in this complex historical issue.

Our analysis in English:

Our analysis in French: