Ousted Nissan Chairman Carlos Ghosn failed to disclose more than $80 million in deferred pay, The Wall Street Journal reported, citing an unnamed person familiar with the company's investigation.
A Nissan probe found that Ghosn accumulated about $82 million in IOUs from Nissan over nine years without any plan for how the compensation would be paid, people familiar with the matter told the Journal. While the company committed to pay him that money, there was no plan set in place for how he would collect the money after retirement.
Japanese prosecutors arrested Ghosn on Nov. 19 for allegedly under-reporting his income. He has since been ousted as chairman of automakers Nissan and Mitsubishi but remains chairman and CEO of Renault.
In 2010, Japan changed the law to require companies to disclose the salaries of executives who earn more than 100 million yen, now worth about $880,000, according to the paper.
Ghosn made about 1.75 billion yen ($15.45 million) the year before, the Journal wrote, citing the person familiar with the investigation.
Instead of facing potential public backlash for his high salary, Ghosn instructed his staff to pay him only $7.8 million and then pay him the rest, roughly $7.5 million, later, the Journal reported.
Nissan told investors Ghosn earned 735 million yen, or $6.5 million at current exchange rates, for its most recent fiscal year that ended March 31. But he deferred most of his pay until after his retirement, bringing his total compensation that year to almost $22 million, according to the Journal, citing the person familiar with the investigation. The Journal could not reach Ghosn for comment, and the office of his attorney declined to comment to the newspaper.
Under Nissan's corporate governance rules, Ghosn, as chairman of the automaker, could decide his own salary. In the following years, he increased the deferred pay rapidly without telling fellow board members — or reflecting that same rate of increase in the pay he reported to the Japanese government, according to the Journal.
Nissan is also examining Ghosn's alleged misuse of company funds for private purposes, including buying and renting apartments and houses, a source familiar with the matter told the WSJ.
Nissan said it could not confirm the Journal report because the investigation is ongoing.
"We can, however, say that, following a whistleblowing report, Nissan has been conducting an internal investigation spanning multiple months into the conduct of Mr. Ghosn and Mr. [Greg] Kelly," Nissan spokesman Nick Maxfield said in an email. "The internal investigation revealed evidence of significant underreporting of compensation, as well as misuse of company assets for personal purposes."
Maxfield said that the company shared the results of its probe with Tokyo prosecutors and subsequently the board. A unanimous vote removed Ghosn as chairman and Kelly from the post of representative director.
Kelly's attorney Yoichi Kitamura told the WSJ that outside experts told his client, through company channels, that the unreported future payments were fine. He did not believe that they had to be included in financial filings. Kelly, like Ghosn, was arrested but has not been charged with a crime.
Read more about The Wall Street Journal's report on what the Nissan probe discovered.