Renault boss Ghosn faces tight shareholder vote on pay

PARIS — Renault boss Carlos Ghosn faces a tense salary vote at the company’s annual shareholder meeting on Friday when the French government, the automaker’s largest shareholder, is expected to oppose his 7.4 million euro ($8.7 million) 2017 payout.

Ghosn, who lost a vote on pay in 2016, is also up for renewal as chairman and CEO for another four-year term in which he has pledged to pursue closer consolidation with alliance partners Nissan and Mitsubishi.

The French state holds a 15 percent Renault stake with double voting rights, capped at 18-20 percent for votes on remuneration and other ordinary business.

The Renault-Nissan chief, 64, secured government support for his renewal – likely to overcome some investor misgivings over his accumulation of senior roles – after agreeing to cut this year’s overall pay package by about 30 percent.

But the government has told Renault it will oppose Ghosn’s 2017 pay, in line with its policy, company and official sources said, raising the prospect of a second negative vote in two years. French “say on pay” votes have become binding since the last rejection.

This time Ghosn may squeak through with the backing of influential proxy advisor ISS, which recommended in a May 22 report that shareholders back a 2017 package that “does not raise any significant concern”. Early investor soundings suggest razor-thin majority support at the June 15 meeting.

However, Paris-based Proxinvest, another advisory firm, recommended a “no” vote on grounds that Ghosn’s additional 9.2 million euros in Nissan pay was poorly disclosed and bonuses too high. “The pay structure remains defective”, it said.

A Renault spokesman declined to comment.

A surprise rejection could cancel Ghosn’s 1.45 million euro variable pay and affect 4.6 million euros in long-term performance shares, despite record Renault earnings last year. That would deal a significant blow to the Renault-Nissan-Mitsubishi alliance’s main architect just as he explores politically sensitive tie-up options.

Renault currently owns 43.4 percent of Japanese affiliate Nissan, which in turn holds 34 percent of Mitsubishi and 15 percent of Renault but no voting rights in its French parent.

Multiple roles

Besides heading Renault, Ghosn serves as chairman of all three carmakers and is described as CEO of their expanding alliance, piloted by a Dutch-registered management company with no direct shareholder oversight or independent administrators – a sore point for some investors.

Government backing will likely be enough to secure Ghosn’s renewal despite negative voting recommendations from ISS and Proxinvest, which both oppose the combining of chairman and CEO roles.

In a letter urging Renault shareholders to approve Ghosn’s new term, lead independent director Philippe Lagayette and two other longstanding board members cited his “track record of high performance” and increased operational delegation to Thierry Bollore, recently promoted to chief operating officer.

And with the pay vote looking tight, the carmaking alliance brought forward its annual synergies disclosure – usually made in July – to announce 5.7 billion euros in performance savings for 2017, a 14 percent year-on-year gain.

“Deeper convergence and increased synergies will cement the sustainability of the alliance for the long term,” Ghosn said in the companies’ statement.

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