Peugeot grilled over pension of chief Varin

Published Nov 28, 2013

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Reuters Paris

The French government told PSA Peugeot Citroën yesterday to review an “inappropriate” pension award to outgoing chief executive Philippe Varin for which it has set aside e21 million (R287m) in provisions.

Peugeot announced this week that Varin would be replaced next year by former senior Renault executive Carlos Tavares in a move that may help it secure new funding from Chinese partner Dongfeng.

But ministers and trade unions bristled at the fact that Varin, who will be stepping down three years before the end of his contract, will receive an annual e310 000 pension net of tax and social charges.

“Given PSA’s difficulties and given that the state has already guaranteed [finance arm] Banque PSA Finance for e7bn, we have asked for some very thorough explanations from PSA on the financial arrangements of his retirement,” Industry Minister Arnaud Montebourg said.

“Things must be reconsidered,” Finance Minister Pierre Moscovici said, standing by Montebourg’s side as the two ministers left a cabinet meeting.

The French car maker is cutting more than 10 000 jobs as it struggles to recover from a six-year European market slump.

Peugeot and Dongfeng are in talks to build on their existing Chinese joint venture with co-operation in other markets and a multibillion-euro share issue that could see Dongfeng and France’s government acquire stakes in the French car maker, according to sources familiar with the matter.

In keeping with company practice, Varin will receive no severance payment when he leaves the group, unlike most of his counterparts at other major French companies.

Earlier, politicians joined criticism of Varin’s pension, led by the CGT union that drew attention to it.

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