The Editorial Board
Financial Times
A LEADER’S MOMENT of exit is crucial, Carlos Ghosn told the Financial Times in June, because it carries a message.
On Monday, Nissan, the Japanese car maker he once helped to rescue, abruptly accused him of “numerous . . . significant” acts of misconduct, including personal use of corporate assets and understating his pay. Tokyo prosecutors arrested him. The company said it would propose stripping the multinational executive of his chairmanship at a board meeting on Thursday.
Mr. Ghosn has not yet commented on the allegations but, whatever the eventual message of his exit, it will not be the one he wanted to send.
Mr. Ghosn’s reputation as the ringmaster of a tripartite worldwide automotive alliance between Nissan, Mitsubishi and Renault, where he is still chief executive, may now be irreparably damaged. The alliance itself, for which he provided the leadership glue, is under threat.
The executive’s fall from grace in Japan is particularly vertiginous. In the 1990s, he restructured Renault, earning the nickname “le cost killer.” He took the same techniques to ailing Nissan in 1999, winning applause from the Japanese, who celebrated his success with everything from a manga comic about his life to a bento — or packed lunchbox — in the shape of his face.
Colorful detail aside, though, Mr. Ghosn’s trajectory resembles that of many high-flying business leaders, for whom hubris is a constant threat. His descent indicates that the flight path of the jet-setting, globetrotting corporate leader has peaked, as barriers to world trade go up and popular tolerance of their pay, perks and lifestyle declines.
This is not to underestimate Mr. Ghosn’s initial success or his phenomenal skills as an executive. At a late-night press conference in Tokyo on Monday, Hiroto Saikawa, who took over from him as Nissan chief executive last year, drew a line under the Ghosn era. Even he conceded, though, that Mr. Ghosn had “done what not many other people could have done,” especially in the first stages of Nissan’s turnaround.
Understandably, shareholders and board members often join in such early acclaim for talented executives. As a result, though, many leaders draw an erroneous conclusion: that they are infallible or irreplaceable.
The strains of doing business across continents are alleviated by high pay and privileges, such as use of private jets and luxury accommodation. Dangers arise when leaders start to take those perks for granted. They untether from the communities where their companies are located, and float off in a gilded bubble with other similarly cocooned magnates. When the bubble bursts, the fall is particularly hard for those chief executives who were merely hired hands, such as Mr. Ghosn, rather than entrepreneurs or founders.
Like political lives, many executives’ careers end in failure. Those who over-extend their tenure are often prone to stumble in their last years in office. The intense focus on pay — a lightning rod for criticism of Mr. Ghosn — adds pressure for listed company executives to perform. Mr. Ghosn seemed to be doing some of the right things to cushion a hard exit. He had handed over to Mr. Saikawa at Nissan, and this year appointed a chief operating officer at Renault to allow him to concentrate on managing the alliance with Nissan and Mitsubishi.
In the end, though, Icarus-like, he may have flown his corporate jet too close to the sun. For chief executives who move in the same circles and who seem never to touch down, Mr. Ghosn’s fate sends an important warning that they had better come down to earth.
