Keiko Ihara
Reviewing the compensation system in order to restore trust and improve business performance
Nissan’s
current
Board
of
Directors
has
many
independent
outside
directors
with
various
backgrounds,
knowledge
and
experiences.
Therefore,
discussions
became
active
with
observations
and
opinions
from
a
wide
array
of
perspectives,
so
that
we
are
now
short
of
time.
I
think
these
lively
discussions
will
lead
to
the
recovery
in
the
company’s
business
performance.
I
believe
that
thanks
to
the
fundamental
revamping
of
Nissan’s
corporate
governance
system,
we
were
able
to
establish
such
a
system.
Restructuring
governance
has
been
a
pressing
task
at
Nissan
since
2018,
when
a
serious
case
of
misconduct
was
discovered.
In
December
of
that
year,
the
Special
Committee
for
Improving
Governance
was
established,
and
considerable
time
was
spent
researching
examples
of
world
class
governance
systems
and
reviewing
the
governance
at
Nissan.
As
a
result
of
this
thorough
process
of
investigation
and
assessment,
a
swift
transition
was
made
to
three
statutory
committees,
as
this
was
necessary
for
Nissan
to
make
a
fresh
start.
An
important
role
for
independent
outside
directors
is
to
ensure
transparency
of
company
management
and
enhance
corporate
value.
In
particular,
high
transparency
regarding
executive
compensation
is
required
in
order
to
restore
the
trust
of
stakeholders.
Therefore,
we
reviewed
all
policies,
principles
and
systems
related
to
executive
compensation.
In
order
to
develop
a
compensation
system
that
is
clear
to
stakeholders,
we
have
to
determine
compensation
in
a
manner
that
is
transparent
and
consistent,
and
also
fair
by
eliminating
discrepancies
between
regions.
At
the
same
time,
it
is
necessary
to
contribute
to
improving
corporate
value
by
creating
a
system
that
will
increase
the
motivation
of
the
company’s
management.
Deliberations
on
compensation
levels
were
made
in
accordance
with
results
of
a
study
conducted
by
a
third-party
specialist,
which
was
based
on
select
benchmark
companies.
The
decision
was
made
to
abolish
the
problematic
share
appreciation
rights
(SARs)
system,
and
discussions
were
held
regarding
a
new
system
of
incentive-based
compensation.
We
considered
the
urgent
task
of
reviving
Nissan’s
business
performance,
as
we
designed
the
balance
between
cash
and
stock-based
payments
as
a
long-term
incentive
to
enhance
performance
motivation,
while
serving
as
a
healthy
incentive
system
for
management.
The
new
stock-based
compensation
system
was
introduced
to
eligible
executives,
shareholders
and
other
stakeholders
through
timely
disclosure.
Captivating products are the key to restoring trust
Above
all,
transparency
is
required
for
restoring
trust
with
stakeholders.
I
believe
it
is
important
to
disclose
information
in
a
timely
manner
to
stakeholders.
Nissan
has
established
a
system
to
enable
timely
disclosure,
so
the
task
moving
forward
will
be
the
sustainable
operation
of
this
system.
The
best
way
to
restore
trust
is
to
provide
customers
with
attractive
cars
and
other
products
that
enrich
their
lives
and
provide
satisfaction.
If
we
produce
such
wonderful
vehicles,
Nissan’s
fans
will
increase,
which
will
lead
to
an
improvement
in
brand
value.
Through
the
transformation
plan
“Nissan
NEXT,”
we
will
streamline
our
vehicle
lineup
to
focus
on
the
most
attractive
vehicles.
We
created
a
plan
to
introduce
12
vehicle
models
over
the
next
year
and
a
half,
including
the
Nissan
Ariya.
As
a
member
of
the
auto
industry,
it
is
exciting
to
promptly
provide
our
customers
with
Nissan’s
exceptional
cutting-edge
technologies.
In
my
case,
I
drive
a
Nissan
LEAF
equipped
with
a
62
kWh
battery,
and
I
can
attest
that
once
you
drive
an
electric
vehicle
(EV),
you
will
never
want
to
drive
anything
else.
The
same
is
true
with
e-POWER,
which
is
the
type
of
cutting-edge
technology
that
just
feels
right.
In
revising
our
midterm
plan,
we
considered
the
strengths
that
can
serve
as
the
nucleus
of
Nissan.
It
became
clear
that
the
core
competence
of
Nissan
is
the
creation
of
exciting
cars
and
the
pioneering
spirit
of
seeking
to
create
what
other
companies
are
unable
to
make.
The
innovation
that
underpins
those
strengths
cannot
be
created
overnight.
The
efforts
of
employees
globally
in
developing
achievements
in
various
technical
fields
resulted
in
Nissan’s
strengths
and
appeal.
Given
the
assets
accumulated,
we
were
able
to
narrow
down
investments
in
2020
to
future
areas
of
focus
in
order
to
establish
the
foundation
for
turning
around
the
company’s
situation.
As
an
independent
outside
director,
I
will
carefully
check
the
progress
of
the
management
strategy
in
the
future.
In
December
2019,
a
new
executive
management
system
was
launched.
We
visited
many
gemba
to
hear
directly
from
employees
and
received
considerable
feedback
regarding
expectations
for
executive
management.
My
impression
is
that
this
is
increasing
motivation
throughout
the
company.
Two
expectations
of
executive
management
are
“effectiveness
and
speed.”
Given
the
auto
industry
is
undergoing
major
changes,
a
key
factor
is
to
speedily
make
management
decisions
and
effectively
implement
them.
Although
significant
improvements
have
been
made
compared
to
the
past,
Nissan
has
further
undeveloped
strengths.
Making
these
possibilities
a
reality
is
a
future
task.
Expressed
differently,
Nissan
has
finally
entered
that
phase.
We
spent
substantial
time
to
restore
the
health
of
our
governance
system
and
now
that
the
foundation
is
in
place,
we
have
started
toward
improving
the
business
performance.
Also aiming to maximize Nissan’s strengths through long-term strategy
The
formulation
of
a
long-term
plan
is
important
for
improving
corporate
value
in
the
future.
It
is
necessary
to
carefully
develop
a
plan
addressing
which
technologies
to
invest
in
and
the
appropriate
timing.
One
area
of
focus
for
me
is
mobility
services.
As
a
leader
in
EVs
and
driver-assist
technologies,
Nissan
is
contributing
to
environmental,
social
and
governance
(ESG*)
factors
through
our
products,
such
as
the
realization
of
smart
grids,
while
at
the
same
time
undertaking
the
challenge
of
creating
mobility
services
to
address
social
problems.
If
Nissan
commercializes
many
services
through
electrification
and
intelligent
functions
of
vehicles,
it
is
possible
to
create
corporate
value
beyond
the
framework
of
an
automaker.
I
also
participate
as
an
observer
at
the
Alliance
Operating
Board.
It
carries
out
lively
discussions
about
medium
to
long-term
plans,
and
there
are
technologies
and
services
that
can
be
made
possible
through
strategic
investments.
The
Alliance
is
a
strength
of
Nissan
as
it
serves
to
improve
operational
efficiency
and
create
value
Information
is
the
key
when
it
comes
to
mobility
services,
so
it
is
important
to
obtain
and
analyze
information
in
each
region,
starting
with
the
area
of
customer
needs.
The
Alliance
is
in
a
favorable
position
to
do
so,
given
its
strong
network,
with
Renault
in
Europe
and
Africa,
Nissan
in
the
Americas,
Japan
and
China,
and
Mitsubishi
Motors
in
Southeast
Asia.
Attention
is
focused
on
an
investment
approach
that
considers
ESG
factors,
and
one
of
the
strengths
of
Nissan
is
that
through
its
products
and
services,
it
is
reducing
the
burden
on
the
environment
and
vitalizing
communities,
primarily
through
EVs,
driver-assist
technologies,
and
connected
technologies.
One
example
is
in
the
field
of
disaster
response.
Nissan
entered
into
disaster-cooperation
agreements
with
local
governments,
companies
and
regional
Nissan
dealers
for
the
use
of
EVs
during
times
of
disaster.
Throughout
Japan,
this
initiative
has
been
expanding
since
2018.
Amidst
the
COVID-19
pandemic,
Nissan
has
also
speedily
provided
face
shields
and
medical
gowns.
I
think
that
coordinating
business
and
social
contribution
activities
will
help
create
sustainable
business
operations
and
improve
corporate
value
by
contributing
to
society
through
our
products
and
services.
As
a
global
corporate
citizen,
we
will
strive
to
provide
automobiles
and
services
that
will
enrich
people’s
lives
in
all
eras.
- Environment, Social, Governance
Published in January 2021