Will Renault CEO Carlos Ghosn be the highest paid French CEO for 2014?

The Paris financial press is not very factual when it merely explains, such as Les Echos, that the Renault CEO’s full  2014 “package” amounted to € 7.2 million for 2014. But the real figure exceeds the twofold.

This newspaper still quotes Proxinvest Chairman, Pierre-Henri Leroy: “Carlos Ghosn will become the highest paid French CEO here, with pharaonic amounts only obeying fuzzy criteria.” Proxinvest, the French partner of ECGS, completed its ECGS research report available on the on line ECGS Shop.

On reading page 142 of the reference document the posted elements for 2014 actually exceeds € 15 million, unless the Echos considers that the CEO works part time only for Renault since he also chairs and manages the Japanese group Nissan. Indeed, Renault indicates a total compensation due for 2014 as approved by the Board of € 7.2 million against € 2.67 million in 2013. Then, a paragraph indicates that he has received a much higher fixed remuneration for Nissan: 995 million yen 2013, i.e.  7.6 million …

The excellent Carlos Ghosn has fetched nearly 15 million euros or 850 the French social minimum wage for an employed manager, and even perhaps more, since its 2014 stake of performance free shares is valued € 4.1 million by Renault is now 8 million worth excluding the possible impact of performance conditions, which conditions remain unverifiable …

Renault information on the Japanese compensation paid to Ghosn the previous year is only released in  yen a practice which is neither clear nor consistent with French law that requires to “communicate the detailed and otal compensation and benefits in kind paid during the year to Managing Directors  and,   ./ ..  received during the year from companies controlled within the meaning of Article. 233-16. ” Nor is this consistent with the  AFEP MEDEF Code for which Completeness is the first principle for determining the remuneration of executive directors…Nor with its application guide (“If the remuneration of executive directors is paid by a third party, whether or not the parent or a shareholder and whether or not invoiced in whole or in part to the listed company, information about it must nevertheless be comprehensive. “)

Clearly the remuneration paid by Nissan in 2013 or 2014 is not approved or considered by the Renault Directors, which have yet this statutory task, nor by its Compensation Committee, which officially refuses to assess all remuneration and perceived  benefits eventually paid by other Group companies to the CEO. The committee is therefore lacking in his mission as defined by Article 18.3 of the AFEP MEDEF Code: ”to place the Board in the best conditions to determine the set of compensation and benefits of Executive dDrectors.”

It will seem acceptable to many, amid improved group performance in  net earnings, “free cash flow” and operating margin, that the variable pay portion due to the CEO for 2014 grew by 31% to 147.5% of the fixed pay:  quantitative criteria were, they say,  fully satisfied and qualitative criteria fulfilled at 96% of expectations…

However it is in February 2014, well ahead of the improved results, that the Renault Board granted it 100,000 free shares valued 4.1 million today … And for 2015 it has already promised him again 100 000-called performance shares, indexed allocation for third on the free cash flow (not otherwise specified), one third of the change in the automobile operating margin percentage points from a panel (PSA car, Fiat Auto EMEA, VW and Skoda Brand Brand), and one third of the total share return (TSR).

It is true that Renault on the basis of the strategy adopted by the remarkable predecessor of Carlos Ghosn, is  on a nice course, but the engine of the current CEO  is clearly not a model of sobriety!