• Carlos Tavares's 2015 compensation totaled 5.25 million euros
  • Economy minister says state votes against `excessive' raises

PSA Peugeot Citroen Chief Executive Officer Carlos Tavares came under fire from one of his biggest shareholders, the French state, after his pay doubled last year as a reward for his turnaround efforts, with the government saying he should set an example and forgo part of his salary.

“Personally speaking, I think that Carlos Tavares is wrong to ignore French sensitivities on this subject,” Economy Minister Emmanuel Macron said in an interview in Wednesday’s edition of Le Parisien newspaper. “Other executives have done differently” and rejected big pay increases, as “in the end, such an ethic can’t be regulated by law but by example.”

Tavares’s remuneration jumped to 5.25 million euros ($5.94 million) in 2015 from 2.75 million euros a year earlier, according to Peugeot’s annual report published last week. France, which owns 14 percent of Europe’s second-largest auto manufacturer and has two representatives on its board, voted to oppose the raise, viewing it as “harmful,” Finance Minister Michel Sapin said Tuesday on France Inter radio.

“The state has a policy that applies to Carlos Tavares as it does to other executives of other companies in which it owns stock: it votes against excessive remuneration such as this,” Le Parisien cited Macron as saying. The finance and economy ministries didn’t respond to Bloomberg’s requests for further comment.

Turnaround Effort

Tavares left competing carmaker Renault SA to take the top job at Peugeot in early 2014 and lead the Paris-based company’s efforts to return to profit. The turnaround included a bailout that involved stake sales to France and Chinese manufacturing partner Dongfeng Motor Corp. Peugeot posted its first full-year profit in three years in 2014, and last year earnings at the automotive division amounted to 5 percent of revenue, more than double the 2 percent margin goal for 2018.

The fixed part of the Peugeot CEO’s salary was 1.3 million euros, unchanged since 2009. The variable component, based on financial targets, was 1.9 million euros last year. Tavares will also get 2 million euros in stock as of 2019.

Compensation is set by the company’s board, Agence France-Presse quoted Tavares as saying Wednesday at a presentation of new cars in northern France.

The total compares with remuneration of 7.25 million euros last year for Renault CEO Carlos Ghosn and 9.7 million euros for Daimler AG chief Dieter Zetsche. Top European carmaker Volkswagen AG, which has yet to announce figures for 2015, paid then-CEO Martin Winterkorn 15.9 million euros two years ago. France also owns a stake in Renault, and the state’s representatives on the board opposed Ghosn’s pay level, which held steady last year after almost tripling in 2014, for the past two years.

Tavares “isn’t paid as much, if we compare him with other carmakers,” a Peugeot spokeswoman said. “The pay is linked to the performance of the group and its recovery.”

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