Carlos Ghosn took another step toward integrating Mitsubishi Motors Corp. (IW 1000/209) into a three-way alliance that can produce about 10 million vehicles a year after shareholders at the Japanese automaker approved his nomination as chairman.
Ghosn, already chairman and chief executive officer at Nissan Motor Co. and Renault SA, will join three other Nissan-appointed executives on the Mitsubishi Motors board of directors after shareholders voted to approve a series of proposals Wednesday. Nissan in October completed its acquisition of a $2.3 billion stake in Mitsubishi Motors after a fuel-economy cheating scandal threatened the automaker with its first annual loss in eight years.
“I know you will have interrogations about whether this enlarged alliance will work,” Ghosn, 62, told shareholders at the extraordinary meeting. “From past experience, I am confident that it will.”
While Mitsubishi Motors’ scandal triggered the stake sale, the increasing resources required for automakers to stay competitive in developing electric vehicles and autonomous-driving technology has pushed smaller companies to partner with bigger competitors. Mitsubishi Motors’ future now hinges on how well it integrates with the French-Japanese alliance with a combined scale to rival Toyota Motor Corp., Volkswagen AG and General Motors Co.
Mitsubishi Executive Changes
Mitsubishi Motors will create executive positions that cut across business units to oversee planning, competitiveness, performance and finance, adopting management structure similar to Nissan’s. The new managers will report to Trevor Mann, who was Nissan’s chief performance officer and joined Mitsubishi Motors to become chief operating officer. The automaker will move away from a seniority-based compensation system and tie pay with performance to attract the best talent, Mitsubishi Motors President Osamu Masuko said. The new remuneration structure will apply to directors, executives and some employees, he said.
With other Mitsubishi group companies promising to support Nissan, minority shareholders of Mitsubishi Motors will increasingly find themselves bound to the priorities of a global car-making alliance that employs 300,000 people in factories from Mexico to China. Nissan and the three Mitsubishi group companies together hold about 51 percent of the car manufacturer.
The three other Nissan-nominated directors to the Mitsubishi Motors board are Mitsuhiko Yamashita, formerly Nissan’s executive vice president of research and development before joining Mitsubishi in June; Hitoshi Kawaguchi, chief sustainability officer and head of global external affairs; and Hiroshi Karube, the larger automaker’s global asset manager.
The board also includes two former Ministry of Economy, Trade and Industry officials. Other Mitsubishi group companies -- Mitsubishi Corp., Bank of Tokyo-Mitsubishi UFJ and Mitsubishi Heavy Industries Ltd. -- have four representatives on the automaker’s board.
Minority Shareholders Voice Concerns
Some minority shareholders at the meeting voiced concerns that their interests may not be adequately represented given the makeup of the board.
“Nissan may be a shareholder, but it is also a competitor,” said Zuhair Khan, a corporate governance analyst at Jefferies Group LLC in Tokyo. “Who will protect Mitsubishi Motors’ own interest?”
With an average age of 67, Mitsubishi Motors also has the oldest board of directors among all Japanese automakers, Khan said.
Shareholders at the extraordinary meeting on Wednesday approved doubling the limit for annual board compensation to 2 billion yen (US$17.3 million) annually from 960 million yen. They also backed the introduction of as much as 1 billion yen a year in new equity-linked remuneration.
By Ma Jie and Yuki Hagiwara