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Honda, lagging rivals, considers opening board to foreigners

Japan’s third-biggest carmaker, long considered a pioneer of Japanese globalisation with the likes of Sony Corp, now lags far behind Toyota Motor Corp and Nissan Motor Co in building diversity in its executive ranks.

Honda's new board member Hideko Kunii.-Reuters

Honda Motor Co is considering diversifying its all-Japanese, all-male board by appointing a foreigner and could move as early as Monday, when it unveils its next slate of directors, sources close to the company said.

“I think we have to think quite seriously, and we are thinking very, very seriously,” Honda Executive Vice President Tetsuo Iwamura told Reuters when asked about naming a non-Japanese to the board. He was speaking on the sidelines of a plant opening in Celaya, Mexico, on Friday.

Japan’s third-biggest carmaker, long considered a pioneer of Japanese globalisation with the likes of Sony Corp, now lags far behind Toyota Motor Corp and Nissan Motor Co in building diversity in its executive ranks.

Japan’s big companies are under pressure to bring in outsiders to bolster governance, risk management and global perspective, having traditionally chosen board members from senior male managers who had spent their careers at the company.

Honda started assembling cars in the United States in 1982 - a Japanese first - and now makes and sells about 80 percent of its vehicles overseas.

It has nevertheless resisted bringing foreigners into the upper echelons of its Tokyo headquarters, sources close to the company said, believing its largely autonomous regional operations, that include locally hired managers, have made it global enough.

That attitude now appears to be changing as it seeks faster growth and puts more emphasis on emerging markets.

The automaker recently consulted a major Japanese bank about diversifying its management board, an individual with knowledge of the matter said.

Sources close to Honda also said the company was considering appointing a foreigner to the board within the next several years and did not rule out that it could name one among board members and executives to be announced on Monday for the new financial year that starts in April. They added, however, that the company was in no hurry to diversify.

The company declined to comment on executive changes.

Lack of diversity

Honda has already appointed non-Japanese to senior posts at regional subsidiaries. At American Honda Motor, John Mendel, formerly with Ford Motor Co and Mazda Motor Corp, is executive vice president overseeing sales, and Mike Accavitti, previously with Chrysler, is senior vice president of auto operations.

Iwamura, their boss, serves as president and chief executive of American Honda.

It was unclear whether Honda was looking at potential foreign board candidates from inside or outside the company.

Honda’s relative lack of diversity at the top contrasts with Japan’s other big automakers.

Nissan, along with French partner Renault SA, is run by French-Lebanese Carlos Ghosn, while 15 of its 58 directors and auditors are non-Japanese and one is a woman.

Toyota, seen as a stalwart of traditional Japanese management, last year appointed American Mark Hogan, a former General Motors Co executive, to its board. Of its 68 directors and auditors, seven are foreign and one is a woman.

Honda last year adopted an ambitious goal to expand global sales to 6 million cars annually by the year to March 2017, a 50 percent jump from last year’s total.

Some executives see a need to work more closely across regions - including joint procurement of parts and materials - to boost efficiency, the sources said.

Honda is also aiming to raise the share of emerging markets in total sales and to revamp its vehicle development process, involving engineers across regions from the earliest stages.