Carlos Ghosn, heard of him? Loves sushi, sported a new Louis Vuitton suit for every car show, had homes in Beirut, Rio de Janeiro, and Paris paid for by the company, and was allegedly quite corrupt.
Ghosn is currently under house arrest in Tokyo awaiting trial for his various alleged financial shenanigans. In the meantime, the Financial Times dropped a feature story headlined “The downfall of Carlos Ghosn” which is about, well, the downfall of Carlos Ghosn.
It’s a familiar tale. The ambitious CEO who is initially very good at his job due to a strong work ethic, ambition, and vision goes too far, confuses the company’s success with his own personal success, and stretches the company and himself too far and too thin before everything inevitably falls apart.
FT has an inconsistently enforced paywall, so maybe you’ll be able to read the article and maybe you won’t, but you should at the very least try, because it has some perhaps unintentionally funny lines like, “There was the absence of truly inspiring new cars in Nissan’s pipeline and the resentment of dealers.”
And some more revealing ones like:
People familiar with Ghosn’s thinking insist he was not overwhelmed by the four roles he eventually played: chairman of Nissan and Mitsubishi, CEO of Renault and head of the alliance. They add that his change in management style was driven by necessity and time constraints rather than a fundamental shift in management philosophy or approach.
His increasing responsibilities meant Ghosn stopped attending annual meetings with key Nissan dealers, who grew frustrated. The company’s position in Japan fell from number two behind Toyota to number five. In spring 2016, dealers demanded “Q&A time” with Ghosn to grill him on Nissan’s flagging performance.
At the same time, Ghosn was coming to the apex of his powers as a global CEO overseeing $200bn a year in revenue. He had begun to refer to himself as the “re-founder” of Nissan.
His visits abroad became like those of a head of state. Personal assistants with headsets would jump out of vehicles ahead of him, alerting others that “the president is arriving”. A team on the ground would spend weeks planning his schedule.
There was also some debate about whether Ghosn was overpaid as a CEO of a Japanese conglomerate at $17 million a year:
Within two years of bringing Mitsubishi into the alliance, Ghosn had become one of the industry’s best-paid executives. In 2017-18, he earned a combined pay package of $17m — compensation he privately felt was more than justified after he rejected an offer to run rival General Motors that might have doubled his pay. The only other Japanese CEO of a listed company who earned more that year was Kazuo Hirai, Sony’s former boss, who earned $25m.
Asked by the FT just months ahead of his arrest whether it had ever occurred to him that he was paid too much, Ghosn laughed: “You won’t have any CEO say, ‘I’m overly compensated.’ It’s not up to me, the board is sovereign on this.”
By American standards, $17 million in annual compensation for a CEO is roughly the median for an S&P 500 company. Pity the poor Carlos Ghosn who was paid merely as a mediocre 500 CEO and not as the exceptional one he believed himself to be, and perhaps was at one time, and thus was only justified in allegedly stealing from the company to pay himself what he truly deserved. It was only fair, right?
Again, you can read the whole FT story here.