PARIS: The French government told PSA Peugeot Citroen yesterday to review an “inappropriate” pension award to outgoing chief executive Philippe Varin for which it has set aside ¤21m ($28.5m) in provisions.
Peugeot announced this week that Varin would be replaced next year by former Renault No.2 Carlos Tavares in a move that may help it secure new funding from Chinese partner Dongfeng.
But ministers and trade unions bristled at the fact that Varin, who will be stepping down three years before the end of his current contract, will receive an annual ¤310,000 ($420,000) pension net of tax and social charges.
“Given PSA’s difficulties and given that the state has already guaranteed (finance arm) Banque PSA Finance for ¤7bn, we have asked for some very thorough explanations from PSA on the financial arrangements of his retirement,” Industry Minister Arnaud Montebourg said.
“Things must be reconsidered,” Finance Minister Pierre Moscovici told reporters, standing by Montebourg’s side as the two ministers left a cabinet meeting.
The French carmaker is cutting more than 10,000 jobs as it struggles to recover from a six-year European market slump.
Peugeot and Dongfeng are in talks to build on their existing Chinese joint venture with cooperation in other markets and a multi-billion-euro share issue that could see Dongfeng and France’s government acquire stakes in the French carmaker, sources familiar with the matter have said.
In keeping with company practice, Varin will receive no severance payment when he leaves the group, unlike most of his counterparts at other major French companies. Speaking on French radio, Varin confirmed he would receive a net annual amount of ¤310,000 but said that did not mean he would end up receiving the total ¤21m for which PSA has provisioned “now or any time later”.
Earlier, politicians joined criticism of Varin’s pension, led by the CGT union that drew attention to it. Jean-Louis Borloo, a former minister who served in France’s last right-wing government and now heads the centrist UDI grouping, said the pension plan was an example of “excessive” compensation packages.
Francois de Rugy, joint parliamentary chairman of the minority governing EELV party, condemned what he called “double standards” between the treatment of Peugeot executives and workers who recently made concessions on pay and conditions.
Reuters
