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France

Peugeot CEO gives up €21mn pension amid outcry

Text by FRANCE 24

Latest update : 2013-11-28

The outgoing CEO of struggling state-subsidised carmaker Peugeot Citroen, Philippe Varin, said Wednesday that he would give up his €21 million pension in the face of widespread outrage at the amount as the automaker and France battle unemployment.

The outgoing CEO of France’s floundering state-subsidised carmaker PSA Peugeot Citroen said Wednesday that he was giving up his €21 million pension after both unions and lawmakers expressed outrage as France struggles with record unemployment.

Peugeot has seen its fortunes falter since Philippe Varin took the helm in 2009. Sales in Europe slumped in the wake of the global financial crisis, compounded by the eurozone debt crisis.

Furthermore, with France experiencing record unemployment and as many workers are forced to accept wage freezes in exchange for keeping their jobs, Varin's anticipated payout had widely been seen as yet another example of executive excess, prompting criticism from across the political spectrum.

"I have decided to give up the current provisions of my pension rights," Varin said at a press conference at PSA headquarters.

He said he made the decision "considering the controversy this subject has sparked”, adding that “the emotions in our country need to be united, not divided, today".

French President François Hollande immediately welcomed his decision. "It was a wise decision, that is the least one can say," Hollande said, speaking while on a visit to Spain.

"It was also the only possible [decision] given the situation of the company, the efforts – not to mention the sacrifices – Peugeot employees have been asked to make, and also taking into account the guarantee offered by the state" to subsidise the struggling automaker, Hollande said.

Peugeot announced Monday that Carlos Tavares, the former No. 2 at French rival Renault, would succeed Varin next year.

Reversal of fortune

Varin had initially tried to defend his lucrative leaving clause.

"When I leave the company, when that time comes, I will not receive any severance pay," he told France Info radio, noting that the €21 million would be used to fund a €300,000 annual pension and it would not be provided in a lump sum.

Varin, 61, later said he would leave it up to the company's board of directors to decide on what would be an appropriate retirement payment.

But the government made it clear that €21 million was not a justifiable figure, with Finance Minister Pierre Moscovici calling it an "inappropriate amount".

Malek Boutih, an outspoken lawmaker from Hollande's ruling Socialist Party, said that ordinary French people were being "asked to tighten their belts while we are offering €21 million to this man".

Former minister Bruno Le Maire, from the opposition centre-right UMP party of ex-president Nicolas Sarkozy, said the sum was “indecent”.

"To leave with a pension of this magnitude when one has failed as the head of Peugeot, when one has not been able to save jobs, when one has asked employees to make sacrifices, I find all this simply indecent," he said.

Peugeot's has struggled under the leadership of Varin. It launched a radical restructuring involving significant job cuts and the closure of a factory, while remaining workers have seen their salaries frozen.

The company required a €7 billion ($9.5 billion) rescue last year in state guarantees for its financing and credit arm while posting a record loss of €5 billion.

Peugeot concluded a strategic alliance with General Motors last year, with GM taking a 7 percent stake in the French carmaker. There has also been persistent speculation that Peugeot is seeking a €3 billion capital injection from Dongfeng, China's No. 2 carmaker.

(FRANCE 24 with AFP)

 

Date created : 2013-11-28

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