Photo/IllutrationCarlos Ghosn, chairman of Renault SA, takes the podium in the French automaker's shareholders’ meeting in April 2016. (Provided by Renault SA)

A view is growing that former Nissan Motor Co. Chairman Carlos Ghosn may have under-reported his compensation from the Japanese carmaker because he feared criticism in France against his high salary.

Several sources are casting doubts on the reason Ghosn cited for the under-reporting, which is that he feared hurting employee morale at Nissan.

They say that Ghosn's biggest reason is probably negativity in France against high executive compensation, where it is said that the public is sensitive to the income disparity between the rich and the poor.

Ghosn, 64, who had been dispatched to Nissan by Renault SA, is serving as the chairman and the chief executive officer (CEO) of the French automobile manufacturer, which is forming an alliance with the Japanese carmaker.

The Special Investigation Department of the Tokyo District Public Prosecutors Office is investigating to determine why he under-reported his remuneration as a board member of Nissan.

Ghosn and a former Nissan representative director Greg Kelly, 62, were arrested on Nov. 19 on suspicion of under-reporting Ghosn’s annual compensation during a five-year period from fiscal 2010 to 2014.

They are also suspected of doing the same during a three-year period from 2015 to 2017.

During the eight years from fiscal 2010 to 2017, the two allegedly decided that Ghosn’s annual remuneration was about 2 billion yen ($17.6 million).

They also created a plan of paying about 1 billion yen of the annual remuneration and disclosing it each year and deferring the remaining 1 billion yen until after Ghosn's retirement, thus concealing half of his compensation.

The reporting of incorrect information constitutes a violation of the Financial Instruments and Exchange Law.

According to sources, Ghosn said under interrogation, “Considering the average remuneration of CEOs of the three major carmakers in the United States, I thought that I should be paid about 2 billion yen.”

He also said, “(If I disclosed the figure of 2 billion yen,) Nissan employees’ morale could decline. Therefore, I devised a plan in which I don’t legally have to disclose part of my remuneration.”

Ghosn is denying the suspicions against him, saying, “(The 1 billion yen to be paid after my remuneration) means that I expect such an amount after my retirement. The amount has yet to be decided, however, as it depends on future economic conditions.”

In Japan, starting with financial statements for fiscal 2009, companies are required to disclose remunerations of board members who are paid 100 million yen or more.

The period followed soon after the collapse of U.S. investment bank Lehman Brothers in 2008. In those days, criticism against high executive remuneration was raging around the world.

From 2015 to 2017, Ghosn received remuneration from the French automaker of about 900 million yen annually.

In the shareholders’ meeting of Renault in April 2016, 54 percent of its shareholders expressed opposition to Ghosn’s remuneration for 2015 on the grounds that it was too high.

As the voting result was not binding, Renault paid the scheduled amount after the shareholders’ meeting.

However, the French government, which has a 15 percent stake in Renault, said that it would take legal steps unless the company took measures to curb the high remuneration of its board members.

Several sources, including some at Nissan, speculate that since Ghosn's 900 million yen pay package was strongly criticized in France, he could not reveal his annual remuneration of about 2 billion yen from Nissan. Taking the “balance with Renault” into account, Ghosn reduced the disclosed amount of remuneration from Nissan to about 1 billion yen.

Renault’s CEO serves as the head of the alliance of the French carmaker, Nissan and Mitsubishi Motors Corp. As Ghosn was putting the most importance on the post, he was paying particular attention to criticism in France, the sources added.