French state leads revolt on Renault pay

Carlos Ghosn, chief executive officer of Renault SA and Nissan Motor Co., reacts during a news conference at the IAA Frankfurt Motor Show in Frankfurt, Germany, on Wednesday, Sept. 16, 2015. The Frankfurt International Motor Show starts on Thursday, and nearly one million visitors are expected to view the latest must-have vehicles and motoring technology from over 1,000 exhibitors in a space equivalent to 33 soccer fields. Photographer: Chris Ratcliffe/Bloomberg *** Local Caption *** Carlos Ghosn©Bloomberg

Renault and Nissan CEO Carlos Ghosn

Renault has suffered a shareholder rebellion over its chief executive’s pay, after the French government and independent investors joined forces to express their opposition to excessive rewards.

About 54 per cent of investors in the carmaker on Friday voted against Carlos Ghosn’s annual €7.3m package in a non-binding vote at the carmaker’s annual meeting in Paris.

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It is the first shareholder vote at Renault since the French state raised its stake to almost 20 per cent, and comes amid worries across the company about the extent of government interference.

However, a group of other shareholders voted in line with the government, which regularly opposes pay rises for executives, said people familiar with the investor register.

One shareholder, speaking in the packed hall on the outskirts of Paris, told Mr Ghosn that while he had “a lot of great qualities” on the issue of pay he was “not exemplary” and his package was “not acceptable”.

Mr Ghosn sprang to his own defence, saying: “I am not the person who fixes my salary. You delegate power to a board of directors who fix my salary. You should trust your board of directors.”

He added: “The most important thing today is that Renault is growing.”

Nissan, which is in a global alliance with Renault, under which they share research and manufacturing, holds 15 per cent the French carmaker’s shares but has no voting rights under a deal reached last year.

Laws came into force in France last April that granted long-term shareholders double voting rights. At the time, the French government raised its stake in order to guarantee these rights, which would allow it to all but block votes on key strategic issues.

But, in December, under a new deal between Nissan, Renault and the state, the government agreed to limit its use of the double voting to major strategic decisions affecting the future of the alliance, which is the world’s fourth-largest carmaker by volume.

In return, Nissan was granted the right to increase its stake in Renault if it believed the French government was interfering with the company. However, Nissan is not allowed to overtake the French government to become the largest holder in Renault.

Both companies have sought to move closer together, and in March agreed to save $ 5.5bn in costs over the next two years. At the time, Mr Ghosn said: “The road ahead is one of more convergence.”

Nevertheless, several people familiar with the alliance’s thinking say the French government’s presence on the shareholder register is a key barrier to a full merger.

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