The Business Times

Renault scraps Ghosn's 30m euro parachute with government backing

Published Wed, Feb 13, 2019 · 03:04 PM

[PARIS] Renault said it had scrapped 30 million euros (S$46.06 million) in deferred and severance pay to former boss Carlos Ghosn, forced out last month following his arrest for suspected financial misconduct at Japanese affiliate Nissan.

Backed by the French government, its biggest shareholder, the carmaker's board agreed on Wednesday to withdraw 25.9 million euros in deferred and performance pay for 2014-18 and waive a non-compete clause worth another 4-5 million euros, approving a proposal that had been reported earlier by Reuters.

The payout to Ghosn, who remains in a Japanese detention centre awaiting trial, was "subject to his presence within Renault", the company said in a statement.

"The board unanimously notes that such condition is not met, thereby triggering the loss of Mr. Ghosn's rights."

Ghosn, 64, was ousted as Nissan chairman soon after his November arrest, and has since been indicted along with Nissan and a fellow director for failing to disclose more than US$80 million in 2010-18 compensation he had arranged to be paid later. He denies the deals were illegal or required disclosure.

The scandal, triggered by a Nissan internal investigation, initially strained its alliance with with 43.4 per cent-owner Renault, which continued to back Ghosn until he was forced to resign as chairman and CEO last month.

Ghosn's chief defence attorney Motonari Otsuru resigned on Wednesday and was replaced by a team that includes high-profile lawyer Junichiro Hironaka, in a change of strategy.

Renault appointed new Chairman Jean-Dominique Senard on Jan 24 and last week passed evidence to prosecutors that the company had paid part of Ghosn's 2016 wedding costs - in a first case of his suspected misconduct at the French carmaker.

Ghosn's representatives say he was unaware the 50,000 euro rental of a palace within the Chateau de Versailles grounds had been charged to Renault, and now plans to repay it.

If left intact, Ghosn's golden parachute could have been politically explosive in France, where President Macron is battling "yellow vest" street protests over low pay and inequality.

Finance Minister Bruno Le Maire had asked the government's lead board representative at Renault to "ensure that Mr Ghosn's compensation is cut as much as possible", a ministry official said on Wednesday.

"We've always been against excessive pay," the official said. "It's not about the presumption of innocence but ethics and decency."

The board approved committee proposals to cancel variable and performance pay in the form of 455,658 shares in the company, according to resolutions seen by Reuters. 

It also agreed to "waive  Ghosn's non-compete commitment and, consequently, not to pay the corresponding compensation", Renault said - adding that a decision on his 2018 pay package would be taken separately at a March 15 board meeting.

The carmaker is due to present its full-year earnings on Thursday, as Mr Senard travels to Tokyo for talks with Nissan CEO Hiroto Saikawa and Japanese officials.


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