PSA Board Backs CEO Varin Amid Talk of Discord

The supervisory board of PSA Peugeot Citroen announced its "complete support" for CEO Philippe Varin, his business strategy and management board.

The unusual endorsement from the entire board follows reports of friction between Varin, the board and the Peugeot family over the company's losses, restructuring plans and four-month-old cost-sharing alliance with General Motors Co.

French newspaper La Tribune had just reported that the Peugeot family wants to fire Varin and his management team. Varin was summoned before the board two weeks ago to defend his strategy, The Wall Street Journal says, citing an anonymous source. Varin took the PSA's top job in 2009 when the board fired Christian Streiff after 16 months in the job.

The Peugeot family has three representatives on the 12-member board, which declared its unanimous backing of Varin. They include Chairman Thierry Peugeot and Vice Chairman Jean-Philippe Peugeot. A fourth Peugeot is an advisor to the board.

The family is the company's largest shareholder with a 25.3% of PSA's common shares. The stock's 68% plunge in the last 12 months has wiped out an estimated €1.5 billion in family wealth. Shares hit a 23-year low of €7.34 last week. The family also holds a 37.9% voting stake.

PSA's net profit plunged 48% year on year to €588 million in 2011. Critics say PSA is especially vulnerable to Europe's slumping auto sales because the company has been slow to expand into emerging markets.

Varin unveiled a restructuring plan in February to sell €1.5 billion in assets, cut R&D and capital spending and reduce costs by €1 billion this year. The company intends to shed 6,000 jobs in Europe and is expected to announce plans to close its underutilized car plant in Aulnay, France.