Renault Board Cuts CEO's 2016 Pay After Spat With Shareholders
28 July 2016 - 9:20AM
Dow Jones News
PARIS—Renault SA's board on Wednesday said it would reduce the
next pay package for its chief executive after the car maker's
dismissal of a shareholder vote against his 2015 compensation
triggered another salvo of outrage against executive pay in
France.
The board approved a recommendation by the company's
remuneration committee to cut the variable share of CEO Carlos
Ghosn's salary by 20% and cap it to 180% of the fixed salary,
Renault said in a statement. The company also changed the way the
variable part will be calculated.
At the company's annual general meeting on April 29 in Paris,
more than 54% of shareholders voted against Mr. Ghosn's pay package
of €7.3 million ($8.1 million) for 2015. A total of 45.9% approved
the package, while less than 1% abstained. The vote was nonbinding,
however, and Renault's board decided to maintain Mr. Ghosn's pay
package.
The CEO's pay was flat last year after almost tripling in
2014.
The outrage that followed the board's decision to override the
shareholder vote led a group of French legislators to start
discussing a new bill limiting executive pay. The issue was made
more sensitive by the fact that the French state is Renault's
largest shareholders after it increased its stake to around 19%
from 15% last year.
French Economy Minister Emmanuel Macron and other top officials
had criticized the board's April decision.
A few weeks before, other ministers had criticized Groupe PSA
CEO Carlos Tavares after his pay almost doubled to €5.3 million as
a reward for his efforts in turning around the company.
Other top managers of French companies such as Sanofi SA, Alstom
SA and Alcatel-Lucent have been under harsh criticism for getting
fat paychecks that some found contradictory with the performance of
the companies they headed.
In the wake of the spat and in a bid to defuse the conflict,
Renault's management decided to ask the remuneration committee to
carry out a wide consultation of shareholders on the issue. The
conclusions were that shareholders wanted Mr. Ghosn to remain at
the helm of the company and that his remuneration was "coherent"
compared with that of his peers, though changes were needed.
Beside the cut in 2016, Mr. Ghosn also told the board he will
donate €1 million a year from his salary to the company's
foundation particularly to help finance education of unskilled
youth and help schools in areas struck by natural disasters and
crisis situations.
Write to Inti Landauro at inti.landauro@wsj.com
(END) Dow Jones Newswires
July 27, 2016 19:05 ET (23:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.