(Bloomberg) -- As Nissan Motor Co.’s shareholders met Tuesday to place new management on the board, the backdrop was grim. Sales and profitability are declining, a turnaround plan isn’t due for another three months and the stock is hovering near decade lows.
Chief Executive Officer Makoto Uchida, Chief Operating Officer Ashwani Gupta, Executive Vice President Hideyuki Sakamoto and Renault SA director Pierre Fleuriot were voted in as directors in essentially a swap with their executive predecessors. The proposals passed with the support of the French carmaker, which owns 43% of its Japanese partner. The voting totals weren’t immediately disclosed.
Nissan has been mired in near-constant turmoil since the November 2018 arrest of former Chairman Carlos Ghosn on charges of financial misconduct. Hiroto Saikawa, Ghosn’s successor and accuser, was ousted over issues of his own compensation, and a key executive who was supposed to form a triumvirate with Uchida and Gupta stepped down in December. The makeup of the board also could determine the course of Nissan’s fraught relationship with Renault.
“A visible improvement is yet to come as Nissan needs to maintain high level of research and development spending to stay competitive,” Bloomberg Intelligence analyst Tatsuo Yoshida said. “Amid sluggish major automobile markets globally, the coronavirus outbreak adds another challenge to Nissan’s turnaround.”
Nissan cut its full-year profit outlook last week and scrapped its year-end dividend payout, slipping to fifth place by market value among Japan’s automakers. The carmaker’s stock is down about 21% this year after halving during the prior four years.
Several shareholders who attended the meeting, which lasted 2 hours and 42 minutes, took the opportunity to grill Uchida on the company’s performance and management, questioning whether he could turn the company around and the board’s selection process for top management. Without directly addressing the claims, the CEO vowed to turn Nissan around.
“I understand that it’s not possible for shareholders to forgive the current situation,” Uchida said. “We are going to move forward with conviction so that our customers will be able to say that Nissan did well, after all.”
By slashing its dividend payment to the lowest level since 2011 and pursuing a plan to cut 12,500 jobs globally, Nissan is trying to free up cash for investment in the next-generation technology needed to stay competitive in electric vehicles and self-driving cars. Uchida has promised a detailed mid-term plan in May.
One key element to watch at Tuesday’s meeting is how much of a mandate Uchida won among shareholders, based on the vote tally. That could affect how aggressively Uchida and the management team are willing to move on restructuring measures.
Saikawa, as well as Yasuhiro Yamauchi, a Nissan veteran who served as interim CEO last year, formally stepped down from the board at Tuesday’s meeting.
(Updates with results of vote.)
--With assistance from Masatsugu Horie.
To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Reed Stevenson, Michael Tighe
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