Prosecutors allege Ghosn’s underlings began scrambling to hide his pay in 2010, the year Japan changed its corporate reporting rules to require executives with big pay packages — those higher than ¥100 million ($948,000) a year — to disclose individual compensation. Ghosn, long under fire for pulling down one of Japan’s highest salaries, wanted to avoid public criticism, they say.
By Ohnuma’s telling, Ghosn was receiving around $15.2 million annually at the time, and the initial goal was to bring down the publicly disclosed portion of it to around $8.5 million. That figure, Ohnuma advised, would be more palatable to Japanese sensibilities.
But in 2010, Ghosn ran into another problem. Only three executives at Nissan were making enough money that year to require the public disclosure of their individual compensation. And all three were non-Japanese: Ghosn, Carlos Tavares, chairman of Nissan Americas at the time and now chairman of PSA Group, and Colin Dodge, Nissan chief performance officer at the time.
According to Ohnuma, Ghosn thought it looked bad that no Japanese executives made enough to cross the threshhold. So in a last-minute decision, he handed out special bonuses to three Japanese executives, including Saikawa, who would later become Nissan CEO. The windfalls just lifted these executives over the bar to require their disclosure.
“Once this remuneration disclosure system was introduced, how much the directors are receiving would be widely known to Japanese employees. There was concern this may lead to complaints that only non-Japanese directors were receiving higher pay, although every employee was working hard,” Ohnuma said. “So Mr. Ghosn decided to pay the additional compensation.”
Ohnuma said that from that year forward, he and other Nissan officials investigated ways to publicly pay Ghosn an amount in line with public expectations, while trying to make sure Ghosn still received the outstanding balance through other, unseen, channels.
Ideas included paying Ghosn the remainder through a Renault-Nissan subsidiary called RNBV that was set up in the Netherlands, sending funds through a separate Nissan subsidiary called Zi-A with offices in the Netherlands and Dubai, and compensating him via long-term incentive plans.
Ohnuma claimed there was some concern that transferring money only to Ghosn from these subsidiaries would raise suspicion. So Ohnuma came up with the idea of creating “dummy” accounts that made it look as if many parties were being paid, he testified.
Ohnuma described Zi-A, the Nissan entity set up with offices in the Netherlands and Dubai, as a “paper company” established by Nada, essentially to make these kinds of payments.
Ohnuma said he provided Ghosn with updates in a memo he always titled “Dear Mr. Ghosn.”
In the end, Kelly and his team decided against these methods, Ohnuma said. Reasons varied, but it was thought most such payments would have to be reported or would become public.
Ohnuma said Ghosn settled on a method of simply earmarking each year’s undisclosed amount as a “postponed” payment that would be delivered to Ghosn after retirement. Ideas for how to handle this included paying it as a post-retirement consulting fee, as a long-term incentive or as payment for a noncompete clause.
Whether that amount was fixed and finalized will be a crux of arguments going forward in the trial, as will the extent of Kelly’s involvement.