Renault Trims CEO Ghosn’s Bonus 20%

Renault SA has relented under pressure from the French government and agreed to cap the bonus it pays CEO Carlos Ghosn at 120% of his salary from the previous 150%.

In May the Renault board rejected a nonbinding shareholder vote to cut the €7.2 million ($7.9 million) in compensation it intended to pay Ghosn for his work in 2015. The package includes €1.2 million in salary, €1.8 in performance-related pay and €4.2 million in deferred stock and bonuses.

The French state threatened to force a rollback if the Renault board failed to reduce Ghosn's compensation. France, with an 18% stake, is the carmaker’s largest shareholder. Last year the government secretly hiked its equity to block an attempt by Ghosn and the board to sidestep a new law that grants longtime shareholders double voting rights.

Renault’s board says a review concluded Ghosn's compensation was in line with packages for other CEOs in the auto industry. But it said it has modified its payout formula to make the remuneration structure “simpler, more transparent and clearer.”

The board notes the variable portion of Ghosn’s compensation has been reduced by 20%. According to a board statement, the variable portion “is subject to quantitative criteria for 85% and qualitative criteria for 35%. In the case of financial over-performance, it could reach a maximum of 180%.”

Ghosn told the board that he decides separately to donate €1 million per year of his variable remuneration to the Renault Foundation. The organization counsels young people with academic or employment problems and helps provide continuity in education around the world in areas hit with natural disasters or other disruptive crises.