The severance package for the former boss of French car maker Renault should not be “exorbitant”, said the country’s finance minister on Sunday. The French government, which is the largest shareholder in the car company, also said that it would keep a close watch on the issue. Ghosn is under arrest in Japan on charges of financial misconduct and since November 19 and was removed as the head of Renault last week.
Ghosn was also replaced by a chairman and a chief executive last week after his role in the company as a chairman and a CEO were bifurcated, Renault had not yet finalised the severance package for the former boss. This can potentially be a politically sensitive issue in France given that the government there is being severely criticised for low pay and inequality and protests are being held in various parts of the country every weekend.
“No one would understand if the severance pay of Carlos Ghosn were exorbitant,” Bruno Le Maire told France Inter radio. “We are going to be extremely vigilant.”
The French government has about 15 per cent stake in the car maker along with two seats on the board of directors of the company.
The resignation of Ghosn came after some pressure from the French government for him to resign even though Ghosn, who was also the chairman of Japanese auto companies Nissan and Mitsubishi, had been promptly removed from his position by both the companies soon after his arrest, Renault however initially did not ace him Ghosn has denied wrongdoing in Japanese court.
On the other hand, Renault and Nissan are also partners in a three way alliance that also includes Mitsubishi and the arrest of Ghosn has reportedly strained the relationship between the French and Japanese partners.
In addition to an annual pension of 800,000 euros, the severance package for Ghosn is worth between 25 and 28 million euros ($28 and 32 million) according to the estimates of France’s CGT union.
While not making any clear mentioned about his views about an acceptable pay-off for Ghosn, Le Maire said that the on an earlier occasion, Ghosn’s 2018 pay package was reduced by 30 per cent from his 2017 total of 7.4 million euros by consistent efforts by the French government.
In the coming months Le Maire would also propose a legislation that would make it mandatory or all executives of large companies based in France to make France their country of tax domicile, said the finance minister.
Le Maire said that big firms listed on the CAC-40 and SBF-120 indexes on the Paris stock market would be the particular target of the possible legislative changes on executive pay. Companies and business groups in which the French government has a stake would also be aimed, Le Maire said.
He added that sanctions for company chiefs that breached the rule would also be sanctioned according to the potential new regulation.
(Adapted from Reuters.com)