Valeo_CEO_CompensationHow should shareholders vote when a company has excellent financial performance, good transparency on executive remuneration but whose total compensation for the Chairman-CEO goes from € 3.3m in 2015 to € 5.3m in 2016, i.e. + 59%?

Simply say NO …


The total compensation of Jacques Aschenbroich, Chairman-CEO of the automotive supplier Valeo, rose 59% to € 5.3 million in 2016, 30% more than the median of the CAC40 index according to Proxinvest.

The automotive sector is now as well known for the optimization of pollution tests as for optimizing the remuneration of its CEOs. Thus, Proxinvest notes that this remuneration is in line with the median of the leaders of the Automotive sector in Europe. It still represents 266 times the French minimum salary and Jacques Aschenbroich thus joins the highly regarded circle of executives whose remuneration exceeds the ceiling of the maximum socially acceptable remuneration of 240 SMIC defined by Proxinvest as of 2005.

While Proxinvest considers that the combination of the functions of Chairman of the Board and Chief Executive Officer is not a desirable governance move, the Board of Directors uses this unfortunate development to justify a 11% increase in base salary. With such monetary incentives to combine CEO and chair positions, there is no need to investigate why France is one of the few countries on the world where there are still combined chairman-CEOs.

The increase in base salary has a direct effect on the annual bonus which is calculated as a percentage of the base salary and capped at 170% fixed, an amount that does not comply with the voting policy of Proxinvest.

Half of the new compensation is composed of performance shares for € 2.7 million.

For this financial year 2016, shareholders have an advisory Say On Pay in resolution 9 in accordance with the AFEP-MEDEF code. For the remuneration to be granted in 2017, shareholders have in France a binding vote in resolution 10 thanks to the Law Sapin 2 but the remuneration policy does not move for 2017. The damage has been done in 2016 and the 2017 total remuneration is likely to remain beyond 5M € according to the new remuneration policy …

Valeo currently has the 34th biggest market capitalization of the CAC40 index, therefore  there is no reason to support such an increase in compensation which would rank Mr. Aschenbroich 10th highest remuneration of the index according to Proxinvest last annual survey about CEOs remuneration in France.

We regret a lack of dialogue and prior consultation by the Lead Independent Director, George Pauget, who also chairs the remuneration committee of Valeo. At the time he was CEO of Crédit Agricole, his decision to acquire the Greek bank Emporiki led to a 9 billion € lose for Crédit Agricole’s shareholders. Maybe the €2M remuneration increase looks like peanuts in comparison with Emporiki disaster…




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