June 18, 2018 / 3:09 PM / 9 months ago

Carrefour rekindles executive pay row in France

PARIS (Reuters) - A row over a lucrative severance package for supermarket group Carrefour’s former chief executive reflects mounting public impatience and government irritation with pay deals for French company bosses.

FILE PHOTO: Georges Plassat, then CEO of Carrefour, the world's second-largest retailer, attends the digital society forum in Paris, February 3, 2016. REUTERS/Charles Platiau

Georges Plassat’s 13 million euro ($15.1 million) payout was tantamount to “thuggish behavior” and did not tally with the state in which he left Europe’s biggest retailer, government spokesman Benjamin Griveaux said on Sunday.

Plassat’s package was approved by 68 percent of votes cast at a shareholders meeting on Friday.

However, it brought howls of anger from unions, employees’ federations and France’s finance minister and within 24 hours Carrefour said Plassat would forego a chunk of the cash.

But that did not satisfy Griveaux.

The dispute comes as shareholders and consumers across Europe become increasingly critical of the lavish sums being awarded to top executives.

It has particular resonance in France where President Emmanuel Macron and his centrist government are having to fend off accusations from the left that their reforms to reshape economic and social policy favor the wealthy.

“If you want to reform the country, everybody must be seen going in the same direction,” said Loic Dessaint, who heads Paris-based Proxinvest, a shareholder advisory firm who had recommended shareholders vote against Plassat’s package.

Plassat’s successor, Alexandre Bompard, was forced in January to announce cost savings of 2 billion euros by 2020, including a voluntary redundancy plan for 2,400 employees at its head office and close stores, as part of a turnaround plan.

“At Carrefour with the job cuts, you create an explosive situation and it quickly becomes a political problem,” added Dessaint.

Plassat, who has joined Belgian private bank Degroof Petercam as a senior advisor, could not be reached for comment.

Other French companies have faced pressure over pay, including Renault where investors on Friday narrowly approved last year’s 7.4 million euro remuneration for Chairman and CEO Carlos Ghosn.

Carrefour said on Saturday that Plassat, who stepped down in July 2017 after five years in charge, would not trigger a clause that would see him pocketing nearly 4 million euros for not joining a competitor.

Proxinvest said before the shareholder vote that since Plassat had retired at the age of 68 the non-competition clause looked like a “disguised retirement benefit” not in line with widely accepted French employers’ guidelines.

Griveaux urged the AFEP and Medef employers’ federations to ensure companies stuck to their executive pay guidelines.

FILE PHOTO: Georges Plassat, then Chief Executive Officer of Carrefour, the world's second-largest retailer, poses before the company's 2015 annual results presentation in Paris, France, March 10, 2016. REUTERS/Charles Platiau/File Photo

Investors in theory do have more power to block pay awards as shareholder votes on pay have become binding since last year.

However, Carrefour’s top shareholders, the Moulin family, Groupe Arnault holding company and Brazilian retail tycoon Abilio Diniz, together control over 38 percent of the company’s voting rights. This made it hard for individual shareholders to be heard at Friday’s AGM, Dessaint said.

Norway’s $1 trillion sovereign wealth fund, the world’s largest, did oppose the pay deals for Carrefour’s current and former chief executives, voting records show.

Additional reporting by Terje Solsvik in Oslo; Editing by Richard Lough/Keith Weir

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