The battle between the voting advisors (Proxinvest, a French member of the European alliance ECGS) and the Renault company has resulted in the resignation of its Chairman, Carlos Ghosn, after having been in prison since December 19, 2018.

This Thursday January 24, 2009Renault announces the expected resignation of Carlos Ghosn to avoid having to pay him an extraordinary bonus. The financial agreement between Renault and Ghosn remains unclear: it is estimated that the bonus could cost the company up to 30 million euros, excluding retirement.

The CEO of a corporation, as a director, is revocable at the will of the board of directors. Given the complications and legal difficulties, Ghosn had to resign from his position in the automotive group, leaving a question mark: How much will this departure cost?

To answer this question, we will analyze the three most important issues:

  1. A retirement planoverly generous

Carlos Ghosn benefits from a defined benefit pension plan on condition that he is a member of Renault. This pension plan allows the attribution of an additional pension with a maximum of €764,946 per year, an income that far exceeds the limit of €300,000 set by our French ECGS partner, Proxinvest, in its corporate governance guidelines.

  1. Remuneration and allocation of shares at general shareholders' meetings

Ghosn benefits from four stock plans totaling up to 380.000 shares valued at 21.6 million euros. The final allocation of shares is subject to the ownership of the beneficiary within Renault, with the exception of "retirement or voluntary retirement". If Ghosn waive these positions on their own initiative in order to enforce their retirement rights, all the shares of the long-term remuneration plan valued at 22 million euros could be definitively awarded.

With respect to the shares granted as part of the deferred variable compensation, the company applies the same exception with the membership condition. Therefore, if Ghosn asserts his retirement rights, he could claim the full amount of the share plan, estimated at €4 million.

If the board of directors had assigned a prorata temporis The remuneration, as defined, would be lower. Proxinvest estimates that it could reach 14 million euros.

Surprisingly there has never been an opportunity to vote on the remuneration issue at any general meeting. This allows the final vesting of the share plan in case Ghosn resigns and is subject to the procedure of the regulated resolutions. But this has not been the case: this allocation of shares should have been recorded in the audit reports and there is no trace of such information.

  1. The payment of a non-competition clause is no longer interest bearing, making its payment unlikely.

A non-competition agreement between Renault and Ghosn was voted for the first time at the 2015 General Shareholders ' meeting and was approved with only 63.50% of the votes. The executive may receive in exchange for his non-compete obligation "during the period of application of the Agreement and subject to non-infringement, a gross financial contribution corresponding to two years of total gross compensation (fixed and variable), payable In twenty-four monthly instalments ", having specified that the governing body shall" decide, at the departure of Mr. Carlos GHOSN, whether or not to apply this non-competition clause and may unilaterally waive the application of this clause ". Thus, Ghosn would be paid with a sum of between 4 and 5 million euros, an excessive amount in view of our voting policy that limits this type of compensation to one year (fixed and variable).

ECGS considers that, if Ghosn resigns on his own initiative, he should not benefit from the generous exit conditions, with the exception of his supplementary pension. However, in the event of resignation to claim his pension rights, remuneration or post-employment benefits could be claimed. We recommend that the board of directors clarify this issue as soon as possible.

Speaking in his first official interview after being arrested on Nov. 19, Ghosn confirms that "there was an integration plan between Renault, Nissan and Mitshubishi Motors" and that the charges brought against him are nothing more than a conspiracy and betrayal.

Original article published in Proxinvest,


Since the publication of this article, Ghosn has been released from jail on bail (nearly $9 million) after 108 days in prison.

On April 5, he returned to prison where he remained until April 22.

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