The Ghosn controversy, with its allegation of large, unauthorized executive expenses, is also prompting media and internal corporate reconsideration of CEO discretionary expense guidelines.

For example, the media has reported that Nissan made large payments towards Ghosn residences in four different cities that were allegedly not justified by business requirements, and also towards travel expenses for Ghosn family vacations. The accuracy of these allegations have not been confirmed. As recent The Wall Street Journal article noted, it is not unusual for high-profile executives to generate controversy arising from alleged expense account inconsistencies. Perceptions of expense account impropriety can often fuel whistleblower complaints.

The current circumstances are a useful prompt for the board, or a committee with delegated powers (e.g., executive compensation or audit) to revisit the continued effectiveness of its current CEO expense account policy. Indeed, the board has a particular responsibility to assure that this policy is up-to-date; achieves the needs of both the executive and the corporation; and is subject to appropriate internal reporting and other meaningful internal checks-and-balances.

Implicit in this review is a recognition that the range and nature of necessary CEO discretionary expenses evolves over time as the general business environment, the manner in which the CEO interacts with customers or other important contacts, and the related expectations of those customers and contacts, may all change. Concepts of corporate jet travel, private school payments, additional housing allowances and family security expenses, are increasingly more legitimate in situations than they would have been in prior years.