Exclusive: Renault boss sees pay row with French government in election year

November 18, 2016 9:19 AM EST

Chairman and CEO of Nissan and Renault Carlos Ghosn pauses as he attends a news conference in Beijing, July 26, 2011. REUTERS/Jason Lee/File Photo


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By Joseph White and Laurence Frost

NEW YORK/PARIS (Reuters) - Renault Chief Executive Carlos Ghosn expects the French government to oppose his pay package in 2017, he told Reuters in an interview, setting the stage for another shareholder meeting clash - this time in an election year.

"I don't think there's any chance that they will approve" Renault's pay proposals, Ghosn said of the likely government position. The economy and finance ministry declined to comment.

Ghosn nonetheless hopes to avoid a repeat of the last annual meeting outcome in April, when investors with 54 percent of voting rights opposed his 7.2 million euro ($7.6 million) pay. "Our objective is to have a majority vote," he said.

The French state owns 19.7 percent of Renault. Under a complex deal struck last year, its voting rights on routine questions including compensation are capped between 17.9 percent and 20 percent, depending on meeting attendance.

Executive pay is attracting tougher shareholder scrutiny at companies from HSBC to BP (NYSE: BP) and has become a hot political issue in France, where campaigning is well underway for presidential and legislative elections next April-June.

The French parliament last week passed a law granting shareholders a binding vote on CEO pay structures, starting next year, and on actual payouts from 2018. Until now, French "say on pay" votes have lacked legal force.

After the April 29 shareholder vote, Renault's board reconvened hastily and decided to uphold Ghosn's 2015 package, while pledging a review of future pay policy.

The immediacy of its response intensified French criticism of Ghosn, who draws a second salary as CEO of alliance partner Nissan <7201.T>, 44.5 percent-owned by the French carmaker.

His 15.6 million euros in combined Renault-Nissan pay last year amounted to the third-biggest haul among CEOs of France's blue-chip CAC 40 index, according to advisory firm Proxinvest, which counsels funds on how to vote their shares.

The firm wants to set a "socially acceptable maximum" for executive pay at 240 times the French minimum wage, or 4.8 million euros at today's rates.

Renault's review culminated in July with a 20 percent cut to the variable component of Ghosn's 2016 pay packet.

The reduction, worth 369,000 euros at last year's levels, is unlikely to satisfy the French government. "We'll need to discuss this again (but) the new board proposals don't yet look sufficient," a ministry source said.

Several people familiar with the matter said Renault's announcement was preceded by weeks of talks with investors who had opposed Ghosn's package or voiced concerns, including asset manager Amundi and Norwegian sovereign fund Norges.

The consultations make it more likely Renault's revised pay policy will command at least narrow majority support at the next shareholder meeting despite state opposition, some said.

France's political calendar nonetheless adds a degree of unpredictability and more scope for corporate embarrassment.

Renault has yet to set a date for the 2017 meeting. Unless substantially delayed, however, it is likely to fall within an election season that begins with the first-round presidential vote on April 23 and ends with legislatives on June 18.

(Additional reporting by Gilles Guillaume; Editing by Mark Potter)



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