Ghosn Receives $9.5 Million Pay After Nissan Returns to Profit

Nissan Motor Co. Chief Executive Officer Carlos Ghosn received 891 million yen or $9.5 million in salary and stock options after the maker of Altima and Versa sedans returned to profit last fiscal year.

Ghosn, 56, who defended his compensation at Nissan’s annual shareholder meeting in Yokohama today, is the highest paid leader at Japanese companies that have declared executive pay, according to data compiled by Bloomberg. Sony Corp. Chairman Howard Stringer earned about 810 million yen in salary, bonus and stock options, the electronics company said last week.

While Ghosn’s pay tops that of other executives in Japan, it lags behind the average for global automotive companies, estimated at about $12 million by Towers Watson & Co., a U.S. benefits consultant. New financial regulations require publicly traded Japanese companies to disclose the compensation of individuals who earn more than 100 million yen.

“Foreign executives leave their jobs if performances are bad, while Japanese executives have lifetime employment and get paid throughout their career even after they leave top positions,” said Peng Xu, a professor at Hosei University in Tokyo. “The differences in pay stem from the differences in employment systems between Japanese and Western companies.”

Photographer: Jeff Kowalsky/Bloomberg

Nissan Motor CEO Carlos Ghosn speaks at the Detroit Economic Club in Detroit. Close

Nissan Motor CEO Carlos Ghosn speaks at the Detroit Economic Club in Detroit.

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Photographer: Jeff Kowalsky/Bloomberg

Nissan Motor CEO Carlos Ghosn speaks at the Detroit Economic Club in Detroit.

Ford Motor Co.’s CEO Alan Mulally earned the most in the auto industry with $17.9 million in 2009, according to data compiled by Bloomberg.

‘Trouble Understanding’

Japanese companies must file their annual reports before June 30, including pay details.

“After hearing how much Mr. Ghosn makes, I am having trouble understanding how this happens,” Motoko Satomi, a 58- year-old Nissan shareholder from Tokyo, said at today’s meeting. “I have a friend whose son is a researcher at Nissan. His salary is so low that his parents have to send him money to help pay his rent.”

Ghosn defended the pay gap between Nissan and other companies in Japan.

“We are a Japanese company, but we have global management,” Ghosn said. “We want our shareholders to have the best performance possible with the best talent.”

About 40 percent of Nissan’s top executives are non- Japanese. The carmaker formed an alliance with France’s Renault SA, its biggest shareholder, in 1999.

Nissan needs international management as sales growth is coming from China, India, Russia and South America, Ghosn said. Shareholders voted to approve compensation paid to the company’s board of directors, he said.

Renault Compensation

The carmaker said earlier this month it would pay its top 12 directors an average of 141 million yen, excluding stock options, for the fiscal year that ended in March. That’s about four times Toyota Motor Corp.’s average and almost three times that of Honda Motor Co., according to separate company statements.

Nissan and Toyota, which made losses in the year ended March 2009, won’t pay bonuses to executives, the companies said.

Toyota, the world’s biggest automaker, and Honda may give details on individual executives’ pay tomorrow, when they hold annual shareholder meetings.

Nissan said five other executives received more than 100 million yen each. Executive Vice President Carlos Tavares was paid 198 million yen in the year ended March, followed by Executive Vice President Colin Dodge, who earned 176 million yen. Chief Operating Officer Toshiyuki Shiga, the best paid Japanese executive, received 134 million yen.

U.S., European Standards

Levels of compensation closer to U.S. and European standards were expected at Nissan, said Koji Endo, an analyst at Advanced Research Japan in Tokyo.

Ghosn also heads Renault and earned 1.2 million euros ($1.5 million) in salary in 2009 from the Boulogne Billancourt, France-based automaker, according to the company.

“What Mr. Ghosn makes by running the alliance of that size is in the middle rank under global standards,” Maurice Levy, president of the French Association of Private Companies, said in a phone interview. “If he had taken the job offer at Ford, he could have earned much more.”

Since Ghosn joined Nissan in 1999, the company’s stock has gained 46 percent, while the Nikkei 225 stock Average has declined 37 percent. Toyota fell 4.5 percent in the same period, while Honda gained 2 percent.

Nissan fell 1.8 percent to 666 yen in Tokyo trading today.

Ghosn’s ‘Miracle’

While Nissan’s executive compensation exceeds that of Toyota and Honda, its profit for the fiscal year lagged behind the company’s two biggest Japanese rivals.

Nissan’s net income in the 12 months ended March 31 was 42.4 billion yen, compared with 209.5 billion yen at Toyota and 268.4 billion at Honda. Nissan’s rapid recovery from a loss a year earlier may be a factor in deciding pay, according to Satoru Takada, an analyst at TIW Inc. in Tokyo.

Ghosn has turned down offers from Ford to take a top job at the U.S. automaker, Bloomberg has reported, citing people familiar with the negotiations.

“If compensation is low you don’t get the talent,” Takaaki Nanjo, a 35-year-old shareholder from Tokyo, said at today’s meeting in Yokohama. “When I was younger, Nissan was a mess. Ghosn came in and built it back up. It was a miracle.”

To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

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