Renault’s board has agreed to provide Carlos Ghosn the company’s CEO a pay package of 7.19 million euros despite Renault’s lackluster results. France’s economics minister Emmanuel Macron has commented saying if Renault does not self-moderate its CEO’s pay, the government, Renault’s largest shareholder, will be compelled to legislate.
With Renault’s shareholder’s voting against a $8.3 million (7.2 million euro) pay package for the company’s CEO, Emmanuel Macron, France’s Economic Minister has come forward to support their move and has disclosed that France will maintain its pressure on Renault to rein in Carlos Ghosn’s pay.
While talking to lawmakers, Macron went hard on what he termed as Renault’s “dysfunctional governance”, with shareholder’s rejecting Ghosn’s payout, only to be overruled by Renault’s board.
In a comment that could have greater ramifications, Macron said the government could consider bringing in firmer steps to check the salaries of executives which are deemed abnormally high unless companies, including Renault shows greater self-moderation.
Co-incidentally, Germany’s finance minister, Wolfgang Schaeuble, had also come down heavily on Volkswagen’s board for not waiving bonuses despite the fact that the diesel emission scandal has brought the company to its knees.
In Renault’s case, after the shareholder’s rejection of the CEO’s payout, the board went in for a consultative vote wherein the state had more than 18% voting rights being the company’s biggest shareholder and it was decided to maintain the CEO’s pay package at the levels proposed, despite its rejection by other shareholders.
Renault’s board has however pledged to review its pay structure from 2016.
Clarifying the government’s position, Macron said the two government representatives had consistently opposed Ghosn’s compensation.
“What we are very clearly demanding is that Mr Ghosn live up to his responsibilities with regard to his compensation for 2016,” said Macron.
He went on to add, given the circumstances, the government will re-convene another board meeting in order to “draw the necessary conclusions, failing which we would be compelled to legislate.”
Renault chose to not comment on Macron’s statements.
For 2015, Ghosn’s total pay structure was 1.23 million euros in fixed salary, 1.78 million in variable pay and a further 4.18 million in deferred bonuses and stock. Furthermore, this was in addition to his second salary as CEO of Nissan for which he got 8 million euros.
This development had repercussions across the channel as well, with shareholders staging a series of protests in Britain for what they deem as excessive salaries for executives.
($1 = 0.8661 euros)
Categories: HR & Organization, Strategy
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