According to foreign media reports, a few days ago, at Nissan’s annual shareholders’ meeting, shareholders expressed dissatisfaction with the poor performance of Japan’s third-largest car company, and some shareholders demanded that management take more responsibility for the company’s deepening crisis.
The meeting was Nissan’s first appearance since Ivan Espinosa, the new CEO of Nissan, replaced Makoto Uchida in April. As a senior executive with more than 20 years at Nissan, the industry is still waiting to see whether Espinosa can reverse the company’s current deteriorating performance.
Image source: Nissan Motor
Espinosa has a significant cost-cutting plan, including closing seven factories and laying off 20,000 employees, about 15% of Nissan’s total workforce.
In response, a shareholder accused the board of “shifting responsibility to front-line employees” through layoffs, but retaining management positions. The shareholder said that the board of directors should also be reorganized, otherwise it may lose the trust of shareholders and employees. Another shareholder expressed dissatisfaction with the dividend cut.
In addition, shareholders vetoed several proposals that the company opposed, including a proposal made by activist shareholders to force Nissan to take action against its publicly traded subsidiary, Nissan Shatai. Tokyo-based activist shareholder Strategic Capital has previously pressured Nissan to take action against its subsidiaries during the restructuring process. Although the proposal was rejected, the details of the vote have not yet been announced.
Nissan holds a 50% stake in Nissan Body, which manufactures cars for Nissan OEM. Strategic Capital holds a 3.5% stake in Nissan and acquires a small stake in Nissan, thus qualifying for a proposal to be submitted to the shareholders’ meeting. The agency proposed that Nissan amend its articles of association to require an annual review of its relationship with its listed subsidiaries and disclosure of proposed actions. Nissan’s board of directors opposed the proposal, saying amending the bylaws would weaken the company’s flexibility.
In recent years, Japanese companies have faced increasing pressure from the Tokyo Stock Exchange and regulators to clean up so-called “parent-subsidiary listings,” which is seen as unfair to minority shareholders and weakens corporate governance.
One example is that this month Toyota Motor announced plans to privatize its listed subsidiary, Toyota Industries. Strategic Capital CEO Tsuyoshi Maruki said Toyota may have taken action because it “felt pressure from shareholders that change had to be made.” He also said he hopes Nissan’s management will consider similar moves.
Nissan is currently facing serious financial challenges, with its stock price falling 36% over the past 12 months and has suspended dividend payments. The company’s net loss in the last fiscal year reached $4.5 billion, and it is still unknown whether it will be able to turn losses into profits this year. Nissan has not yet given a full-year profitforecast, only expects a loss of 200 billion yen (US$1.38 billion) in the first fiscal quarter.
