First challenge for Renault’s new chiefs: Ghosn’s payout

The ousted Nissan boss has pleaded for bail after languishing in custody for 64 days as he fights charges of financial misconduct that he strenuously denies. (File/AFP)
Updated 27 January 2019
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First challenge for Renault’s new chiefs: Ghosn’s payout

  • Ghosn had already raised hackles in France as one of its highest-paid business chiefs, and a huge payout for an executive sitting in a Tokyo jail wouldn’t go down well amid the “yellow vest” protests
  • The 64-year-old Franco-Brazilian-Lebanese executive was arrested in November on charges of under-reporting tens of millions of dollars in income over eight years

PARIS: Carlos Ghosn may no longer be in the driver’s seat at Renault, but he will remain at the center of vigorous negotiations in the coming weeks over severance pay potentially worth tens of millions of euros.
The French government, which owns 15 percent of the carmaker and 22 percent of voting rights, has already warned it doesn’t intend to let the former CEO walk away with the kind of lavish payouts that he is accustomed to.
“I can tell you we will be extremely vigilant, as the largest shareholder, over the exit conditions that will be set by the board,” Finance Minister Bruno Le Maire told AFP at the World Economic Forum in Switzerland this week.
Ghosn had already raised hackles in France as one of its highest-paid business chiefs, and a huge payout for an executive sitting in a Tokyo jail wouldn’t go down well amid the “yellow vest” protests over declining living standards.
The 64-year-old Franco-Brazilian-Lebanese executive was arrested in November on charges of under-reporting tens of millions of dollars in income over eight years as head of Renault’s alliance partner Nissan.
He has denied that and other financial misconduct claims and his trial may still be months away.
He tendered his resignation at Renault this week, having already been sacked as chairman of Nissan and the third carmaker in the alliance, Mitsubishi.
But his eventual payout was not discussed by Renault directors when they met Thursday to name his replacements, Thierry Bollore as chief executive and Jean-Dominique Senard as board chairman.
“If his payout is being discussed later, it’s because his resignation was immediate and not negotiated,” said Loic Dessaint of the Proxinvest shareholder advisory group.
“That’s rare,” Dessaint said, suggesting that by doing so, Ghosn was hoping to benefit immediately from any pre-discussed “golden handshake.”
“But Renault also has a strong hand to play, because it can file a lawsuit and claim damages” against its former chief if he is found guilty in the Nissan case, he said.
As with most CEOs, Ghosn’s pay was a mix of fixed payouts coupled with performance-linked stock grants and cash top-ups.
In 2016 the executive known as a “cost-killer” for slashing outlays and jobs took home a combined 15.4 million euros ($17.6 million) from his roles at Renault, Nissan and Mitsubishi.
Seven million euros came from Renault alone, drawing the ire of French officials, and last February Ghosn was forced to accept a 30 percent pay cut in order to secure another four-year mandate as CEO.
According to the automaker’s annual report, Ghosn’s resignation means he must forfeit any shares granted for meeting performance milestones.
“But what counts is what they will decide about shares already attributed but not yet awarded,” said Dessaint, saying Ghosn could claim a trove of 380,000 shares currently worth some 21 million euros.
“It’s the same story with deferred stock grants, worth four to five million euros,” he calculates.
Company officials have refused to comment on the eventual indemnities.
But a source close to the matter said that given the circumstances of Ghosn’s exit, “we’re going to reduce them as much as we can.”
Even if an agreement is reached on the standard retirement package, lawyers will still be wrangling over two other multi-million-euro questions.
The first involves a non-compete clause that provides two years of total pay — both fixed and variable — in exchange for not joining another carmaker.
“Renault would be pretty stupid to pay,” Dessaint said, “because the risk is basically nil since he’s in prison.”
Ghosn’s lawyers have lost two requests for bail, and under Japanese legal rules he could remain behind bars for months before his trial even opens.
The second bone of contention involves a retirement pension that would be payable each year to Ghosn until his death.
According to Dessaint, Ghosn is eligible to receive 765,000 euros a year after leading Renault since 2005, forging an alliance which sold more cars than any of its rivals last year.


US wins WTO ruling against China grain import quotas

Updated 19 April 2019
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US wins WTO ruling against China grain import quotas

GENEVA: The United States won a World Trade Organization (WTO) ruling on Thursday against China’s use of tariff-rate quotas for rice, wheat and corn, which it successfully argued limited market access for US grain exports.
The case, lodged by the Obama administration in late 2016, marked the second US victory in as many months. It came amid US-China trade talks and on the heels of Washington clinching a WTO ruling on China’s price support for grains in March.
A WTO dispute panel ruled on Thursday that under the terms of its 2001 WTO accession, China’s administration of the tariff rate quotas (TRQs) as a whole violated its obligation to administer them on a “transparent, predictable and fair basis.”
TRQs are two-level tariffs, with a limited volume of imports allowed at the lower ‘in-quota’ tariff and subsequent imports charged an “out-of-quota” tariff, which is usually much higher.
The administration of state trading enterprises and non-state enterprises’ portions of TRQs are inconsistent with WTO rules, the panel said.
Australia, Brazil, India, and the European Union were among those reserving their rights in the dispute brought by the world’s largest grain exporter.
In a statement, US Trade Representative Robert Lighthizer and Secretary of Agriculture Sonny Perdue welcomed the decision, saying China’s system “ultimately inhibits TRQs from filling, denying US farmers access to China’s market for grain.”
If China’s TRQs had been fully used, $3.5 billion worth of corn, wheat and rice would have been imported in 2015 alone, it said, citing US Department of Agriculture estimates.
The two WTO rulings would help American farmers “compete on a more level playing field,” the USTR statement said, adding: “The (Trump) Administration will continue to press China to promptly come into compliance with its WTO obligations.”
The latest WTO panel said that the United States had not proven all of its case, failing to show that China had violated its public notice obligation under the General Agreement on Tariffs and Trade (GATT) in respect to TRQs.
China’s Ministry of Commerce said in a statement on Friday it “regrets” the panel’s decision and that it would “earnestly evaluate” the panel’s report.
China would “handle the matter appropriately in accordance with WTO dispute resolution procedures, actively safeguard the stability of the multilateral trading system and continue to administer the relevant agricultural import tariff quotas in compliance with WTO rules,” it said.
Either side can appeal the ruling within 60 days.