UPDATED 2.20PM: Michel Combes is facing scrutiny over a bumper compensation package he is due following his departure as Alcatel-Lucent CEO, with France’s financial regulator AMF stating it will look into the matter.
Combes, who was this week appointed COO of cable-to-mobile group Altice and chairman of its mobile subsidiary Numericable SFR, has come under fire in France following reports that he will receive almost €14 million in stock by 2018 for his services to Alcatel-Lucent.
The exiting chief is widely renowned for turning around the fortunes of the struggling French vendor when taking on the job in 2013, as well as masterminding the company’s €15.6 billion sale to Nokia, which led to his departure.
Questions have however been raised over the size of Combes’ package, given that he was in the job for just over two years.
Executive compensation and golden parachutes are also controversial topics in France. The Financial Times reports the issue became increasingly contentious since the election of the Socialist Party in 2012, with President Francois Hollande using a crackdown on big payouts as a central theme to his campaign.
According to Reuters, AMF first raised concerns over Combes’ compensation package at the end of last month, which Alcatel rejected earlier this week, stating that it had acted transparently and in line with guidelines.
AMF head Gerard Rameix hit back yesterday, claiming Alcatel’s response “seems unconvincing in terms of good governance, or even in legal terms”.
AMF staff have reportedly been ordered to look into whether industry standard governance codes had been respected, which includes compliance of rules allowing investors to have a “say on pay”, as part of amended rules in 2013.
“Shocking” and “bad corporate behaviour”
France’s economy minister Emmanuel Macron said today he is waiting for a verdict on the circumstances of Combes’ departure from AMF and a corporate governance committee by the end of the week.
Speaking to reporters, Macron said Combes’ departure before the finalisation of the Nokia takeover was “shocking” and showed “bad corporate behaviour”.
“It’s not normal that a big company boss is the first to jump ship. Combes led a merger of Alcatel-Lucent and Nokia that we supported,” said Macron.
“So it is neither comprehensible nor acceptable that Combes has decided today to leave the company, when the transaction hasn’t even been completed, both morally and in terms of the proper functioning of the company.”
Speaking to local radio, France’s finance minister Michel Sapin also weighed into the issue, stating that executive pay, “at any given moment, is necessary to have some common sense, a little measure, some restraint. In this case, Michel Combes has not had any”.
Combes defended the payment in an interview with French Daily Les Echos earlier this week, saying the sum he is due to receive was down to reducing a fixed portion of his own salary to €1.2 million, while “maximising the variable portion”, which was dependent on long term group performance.
Despite the outcry over the package, Combes’ pay-out is smaller than some of his counterparts in the industry known for leading their companies to big mergers.
Former Nokia CEO Stephen Elop reportedly took home $25 million after the company’s handset business was taken over by Microsoft, while Virgin Media CEO Neil Berkett walked away with a whopping $86.8 million after orchestrating the Liberty Global deal.