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France: Renault chief’s massive €7 million salary package gets green light

Renault shareholders on Thursday narrowly backed the whopping €7 million pay package of long-serving chief executive Carlos Ghosn despite the French government, which owns a 20 percent stake, trying to block the move.

Published: 16 June 2017 10:04 CEST

France: Renault chief's massive €7 million salary package gets green light

Photo: AFP

Renault shareholders on Thursday narrowly backed the pay package of long-serving chief executive Carlos Ghosn,
overcoming protests about an issue that has divided the carmaker and the French government for several years.

Shareholders voted in favour of a resolution on Ghosn's 7 million euro ($7.8 million) package for 2016 and his 2017 deal, which has yet to be defined.

The 2016 package received the backing of 53 percent of shareholders meeting in Paris, while the outline of the 2017 deal was backed by 54 percent.

The Brazilian-born head of the Renault-Nissan-Mitsubishi alliance was last year locked in a tussle with Renault shareholders who voted to reject his salary.

The shareholders' decision last year was not binding and the Renault board dismissed their concerns and signed off on Ghosn's salary.

The then-economy minister Emmanuel Macron, who swept to the French presidency in May, was a frequent critic of Ghosn's pay and the two also clashed over the state's influence over the carmaker.

Representatives for the government, which is Renault's biggest shareholder with a stake of nearly 20 percent, voted against Ghosn's pay packet on Thursday.

The vote on the 2017 salary was binding following the entry into force of a new law strengthening shareholder control over executive salaries.

Ghosn announced in February he was stepping aside as chief executive of Nissan after being widely credited with helping to save it from collapse, although he continues to lead the global alliance which added Japan's Mitsubishi to its ranks last year.

The carmaker is considering paying its top executives bonuses through a company based in the Netherlands, Reuters revealed this week, but Renault said no decision on such a procedure had yet been taken.

Renault's profits leaped 20 percent in 2016, driven by strong sales with net profit jumping by 19.7 percent to 3.54 billion euros.

France ready to cut Renault stake to shore up Nissan partnership: minister

A Renault employee works at the automaker's factory in Maubeuge, northern France. File photo: Ludovic MARIN / AFP

He was speaking in Japan after Italian-US carmaker Fiat Chrysler pulled the plug on its proposed merger with Renault, saying negotiations had become “unreasonable” due to political resistance in Paris.

In an interview with AFP on the sidelines of the G20 finance ministers meeting in Japan, Le Maire said Paris might consider reducing the state's 15-percent stake in Renault if it led to a “more solid” alliance between the Japanese and French firms.

“We can reduce the state's stake in Renault's capital. This is not a problem as long as, at the end of the process, we have a more solid auto sector and a more solid alliance between the two great car manufacturers Nissan and Renault,” he told AFP.

Last week, FCA stunned the auto world with a proposed “merger of equals” with Renault that would — together with Renault's Japanese partners Nissan and Mitsubishi Motors — create a car giant spanning the globe. The combined group would have been by far the world's biggest, with total sales of some 15 million vehicles, compared to both Volkswagen and Toyota, which sell around 10.6 million apiece.

But the deal collapsed suddenly on Thursday, with FCA laying the blame at the door of Paris.

“It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” FCA said in a statement.

Le Maire said Renault should concentrate on forging closer ties with its Japanese partner Nissan before seeking other alliances.

Things need to be done “in the right order…. First the alliance (between Nissan and Renault) should be consolidated and then consolidation (more generally) and not one before the other.”

“Otherwise, everything risks collapsing like a house of cards,” he warned.

The minister said it would be up to the bosses of Renault and Nissan to decide how to push the alliance forward as ties between the two firms have been strained after the shock arrest of former boss Carlos Ghosn.

Renault is pushing for a full merger between the pair but there is deep scepticism of the plan at Nissan.

There were varied reactions from the French unions Saturday.

“The government is behaving like the agent of the big shareholders, favouring short-term profit to the detriment of the interests of the country,” said Fabien Gache, of the CGT union.

Cutting the state's share in Renault was abandoning its responsibility in the country's auto industry, he argued.

Franck Daout of the CFDT union said it backed a three-way alliance between Renault, Nissan and Japan's Mitsubishi — but not one between Nissan and Renault until the alliance had reached a “safe and sustainable maturity”.

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