Lanxess AG (LXS)’s former chief executive officer agreed to forgo 9.2 million euros ($12.6 million) in severance pay, and with that a dispute about security equipment installed at his house is over, according to the German chemical maker’s supervisory board chairman.
After “non-appropriate” payments for security provisions at Axel Heitmann’s new house in Hamburg, the former CEO agreed to repay the money and skip severance pay equivalent to two years of salary, Supervisory Board Chairman Rolf Stomberg said today at the annual shareholder meeting in Cologne.
Stomberg, who fielded shareholder questions on the issue at the meeting, said Lanxess wasn’t obliged to pay for the measures because equipment had been installed at the executive’s previous house, and the decision to move was personal. The extra cost for security windows and doors at the new residence was 430,000 euros.
Heitmann will determine how to respond after today’s meeting, according to a spokesman. The former CEO hired lawyers to look into whether he was improperly compelled to give up the severance pay, the spokesman said two months ago.
“The matter was over from the point of view of the supervisory board” after outstanding salary of 2.1 million euros was paid, Stomberg said today. “The fact that the issue was reported in various press articles in March is regrettable and not in the interest of the company.”
Lanxess said on Jan. 26 that Heitmann, a former Bayer AG manager who led the chemical maker since its inception 10 years ago, would leave at the end of February and be replaced by Merck KGaA finance chief Matthias Zachert. Stromberg reiterated today that the board didn’t know about the security issue at the time, and that Heitmann left in a strategy conflict.
The company, which makes synthetic rubber and gets about 40 percent of sales from car and tire producers, said today it will cut capital expenditures starting next year. Spending on projects such as new factories was “very ambitious” in recent years and exceeded that of competitors, Zachert said today.
Heitmann agreed to forgo the severance pay because the company told him in February that he would otherwise be dismissed immediately and face a no-confidence vote at the annual shareholder meeting, according to his statements in legal documents prepared by his lawyers at Lexpert and Feigen Graf.
Heitmann disagrees with Lanxess’s assessment that the installation and payment of security equipment wasn’t known. The company’s corporate security department devised the measures, checked on their execution and looked at the invoices, according to documents from his lawyers.
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