Renault Shareholders Narrowly Pass CEO Pay Amid ControversyBy
Investors sign off Ghosn’s 2016 compensation with 53% vote
French state once again voted against the CEO’s pay package
Renault SA shareholders approved Carlos Ghosn’s 7 million-euro ($7.8 million) compensation for last year over the objections of the French government, which argued that the automaker’s chief executive officer is overpaid.
Shareholders voted 53 percent in favor of the CEO’s 2016 pay in an advisory decision at the company’s annual meeting on Thursday in Paris. The French state, which owns 19.7 percent of Renault, opposed Ghosn’s remuneration for the fourth time, a spokeswoman for the state’s participation agency said. In July last year, Renault’s board cut the variable component of Ghosn’s pay package by 20 percent, which wasn’t enough to satisfy the French government.
The victory is a sign that most stockholders are satisfied with steps Renault’s board took in response to the vote against Ghosn’s pay at last year’s meeting. The board reduced variable bonuses and made it more clear how pay is calculated. ISS, an advisory firm that last year opposed the CEO’s compensation, this year recommended that investors approve the package.
Still, the state’s opposition adds to the tensions between Ghosn, 63, and French President Emmanuel Macron, who as economy minister objected to the CEO’s salary as well. Ghosn has chafed at the state’s holding, which France boosted in 2015 against the company’s wishes in order to secure extra voting rights. Macron told the CEO about the move in a late-night phone call just hours before the news became public.
Following last year’s controversy on Ghosn’s 2015 pay package, which the board kept in place despite shareholders’ disapproval, France passed a law to require a binding say-on-pay vote on the current year’s compensation. Renault shareholders approved Ghosn’s 2017 package by 54 percent.
Renault shares rose 1.7 percent to 83.59 euros at 9:22 a.m. in Paris trading, lifting the gain in the past year to 12 percent and the company’s market value to 24.7 billion euros.
In yet another sign that Ghosn’s salary has become a political issue, Renault postponed its shareholder assembly from April to June to avoid holding the meeting in the middle of France’s presidential campaign.
Proxinvest, another advisory firm, recommended rejection of the CEO’s package, citing his accumulation of wages from both Renault and Nissan Motor Co. In April, Ghosn left his position as CEO of the Japanese carmaker after 16 years to become chairman, citing the need to focus on turning around the operations of Mitsubishi Motors. The executive is also chairman at Mitsubishi, in which Nissan owns a 34 percent stake.
A Reuters report that bankers have designed plans to provide additional, undisclosed bonuses to Ghosn and other managers via a specially created Dutch-registered service company further fueled the controversy over the executive’s pay. At the meeting, Ghosn, visibly annoyed, said that the proposal was submitted to the companies but that they were nowhere close to creating such a fund. He added that he had called the head of Reuters about the report.