“I am an employee like any other.” Asked this Tuesday about his remuneration as CEO of Stellantis, Carlos Tavares defended himself against any abuse, assuring that the 19 million euros he received in 2021 were “the translation that the company’s results are good, even very good (… .) )”. At the same time, the head of TotalEnergies, Patrick Pouyanné, said he was “tired” of the attacks, accusing him of having “increased 52%” last year.
“I am not the one who sets my remuneration,” recalled in particular the CEO of the oil group. The French Commercial Code establishes that it is up to the boards of directors to set the remuneration of the managers of large limited companies such as TotalEnergies.
This remuneration may consist of a fixed part and a variable part (bonus) per year. The payment of the latter is conditioned to the achievement of both quantitative and qualitative objectives. Referring to his remuneration, Carlos Tavares assured that it “resulted from a decision of the board of directors of (his) company of his.” “I am an employee like any other, so I have a benefit, 90% variable salary. The board decides on a certain number of targets, they are met, the company pays,” he said.
The directors of large companies can also benefit from stock options, free shares, “attendance rates”, or even other elements such as “hat pension”, indemnities for breach of contract, etc.
“Say We Pay”
The salaries of the managers of large private companies are not capped, unlike those of the heads of public companies (450,000 euros gross per year maximum). However, its supervision has been strengthened in recent years in an attempt to limit abuses. In 2003, the NRE law passed two years earlier established an obligation of transparency on the remuneration of directors of large listed companies. In concrete terms, the management report that is presented each year to the shareholders at the general meetings must now detail all the elements of compensation, as well as the benefits of any kind paid to each of the company’s officers.
Under pressure from the government at the time, the French Association of Private Companies (AFEP) and Medef strengthened their governance code ten years later by introducing “say on pay” consisting of presenting directors’ remuneration at the general meeting.
This is how Renault shareholders rejected in 2016 the compensation of Carlos Ghosn, then CEO of Renault, set at 7.2 million euros for 2015. A decision that did not prevent the board of directors from validating it. And due, the vote of the shareholders was at the time purely advisory.
binding vote
Given the controversy unleashed by the salary of Carlos Ghosn, but also by that of Carlos Tavares, the Government has decided to take measures. In 2016, the Sapin II law gave more power to shareholders of listed companies. Since the entry into force of this text, your vote at the general meeting on the remuneration of the directors of the past and future years is binding. In case of disapproval, only the fixed part is paid.
So much for French law. However, the rule is not always the same with our neighbors. Carlos Tavares knows something about it. Last April, a majority of shareholders spoke out against Stellantis’ compensation report. Only an advisory opinion, according to the principles of Dutch law, where the manufacturer born from the merger of the Peugeot-Citroën-Opel and Fiat-Chrysler groups is registered.
Source: BFM TV
