Hiroto Saikawa, as chief executive of Nissan, is coming under increasing pressure as he faces a potentially destructive assessment of minority shareholders at the company's annual meeting later this month, people close to the automaker said.
The assessment found that two of the largest investors recommended by the proxies voted against the re-election of Mr. Saikawa as a director at the meeting on June 25.
People close to Nissan said Saikawa would likely receive support from Renault and its 43 percent stake for technical reasons, but would suspect it would lose the support of a majority of its remaining shareholders. One of these people said that Mr. Saikawa had "borrowed the time" as managing director.
Representatives Institutional Shareholder Services and Glass Lewis based their arguments on Saikawa's many years of collaboration with Carlos Ghosn, the former Nissan chairman, who was arrested in November and is awaiting trial in Tokyo.
To ensure his reappointment, Mr. Saikawa will have to vote in favor of at least half of the voting shareholders at Nissan's Annual General Meeting.
The recommendations of proxy holders in Japan have received much greater resonance following Tokyo's efforts to devote more attention to corporate governance to institutional investors. Asset managers, in particular with government pension fund mandates, are increasingly under pressure to vote their shares and explain their decisions.
In a letter to investors this week, the ISS said that because of Saikawa's lengthy involvement in the board of Nissan, and since he was long considered one of Ghosn's closest allies, it would be difficult for him to be completely unconnected with the alleged one To keep misconduct by Ghosn.
According to ISS, Nissan has built a corporate culture that reflects Ghosn's "effective dictatorship".
"To break out of the past, the company needs to build a strong board with fresh members. Given that Mr Saikawa has been on the Board of Directors for 14 years and works closely with Mr Ghosn, the appointment of Mr Saikawa to the Board of Directors is not considered appropriate, 'the letter said.
The letter noted that Saikawa, who has not been prosecuted by Japanese prosecutors, has signed Ghosn's controversial resignation package – just one example that casts doubt on Nissan's claim that Ghosn is "completely wrong and Nissan is just a victim ", ISS said.
In a separate recommendation, Glass Lewis sharply criticized Nissan's poor internal controls and weak risk management, saying that it could not support the re-appointment of Mr. Saikawa as President "because he should have taken greater steps in his conduct [the company’s] Supervisory duties in the misconduct of board members ".
Nissan declined to comment on both recommendations.
The calls to vote against the re-appointment of Mr. Saikawa come from the fact that the Nissan boss has trouble saving the Japanese carmaker from years of miserable governance, a quality control scandal and declining financial performance.
In addition, Nissan's relationship with its French partner has worsened as Fiat Chrysler Automobiles withdrew its merger proposal to Renault.
These tensions threaten to undermine Mr. Saikawa's biggest contribution to improving governance since the overthrow of Mr. Ghosn – the planned introduction of a board of directors with three committees. Renault's chairman, Jean-Dominique Senard, told Mr Saikawa last week that the French company would use its stake in Nissan to block the overhaul.