(Bloomberg) --
The recently ousted CEO of embattled French nursing-home operator Orpea SA received 2020 bonus payments linked to revenue growth targets even after the company missed those goals.
Yves Le Masne, whose departure from Orpea was announced Sunday following revelations in a book alleging mistreatment of residents in some of the company's nursing homes in France, was paid 118,256 euros ($133,400) in 2020 bonus payments linked to targets Orpea failed to achieve amid the Covid-19 pandemic, company filings show.
The board approved the payments even as Orpea received Covid aid from the government and as top executives at several European companies from British banks to French luxury houses took pay cuts and eschewed bonuses. Sophie Boissard, CEO of Orpea rival Korian SA, took a 25% cut in her gross compensation that year.
The payments to Le Masne may raise fresh questions about Orpea's governance practices as scrutiny intensifies following the publication of the book “The Gravediggers,” which vaulted the company into a national scandal and prompted a government investigation.
Orpea's annual report shows that an overall revenue growth of 8% and organic growth of 4% in 2020 had been targeted to trigger bonus payments to the CEO. Neither of the two targets was achieved. Revenue grew by 4.9% and organic revenue growth was zero.
The board of directors “considered the revenue growth and organic revenue growth objectives to have been attained, since the company was able to increase its total revenue and keep organic revenue stable, despite the exceptional circumstances,” Orpea said in the 2020 filing.
That year, Orpea got at least 158 million euros in pandemic-related government aid, according to the 2020 annual report. The company declined to provide details of the aid it received. The year also saw greater public and government scrutiny of nursing homes for their high Covid mortality rates.
The company was thrust into the spotlight again when excerpts from the book were published in the daily Le Monde on Jan. 24. The book claims the company put profits ahead of the welfare of the residents, rationing items like food and adult diapers.
France Probes Orpea as ‘Gravediggers' Book Sparks Outrage
Orpea shares have since lost more than half their value, a string of government representatives -- including President Emmanuel Macron -- have expressed shock and disgust over the revelations in the book and the company faces financial and administrative probes by the French government.
Shares of Orpea, like those of rival Korian, tumbled anew on Friday after Le Parisien newspaper reported that an investigative TV show may have new revelations on nursing-home operators. Korian plummeted as much as 21%, while Orpea slid as much as 14%.
Orpea has denied many of the allegations in the book by author Victor Castanet, calling them false, outrageous and prejudicial. It is now trying to restore shattered public and investor confidence and has hired two outside firms, Grant Thornton and Alvarez & Marsal to carry out an independent study of the allegations. Philippe Charrier, who replaced Le Masne in the CEO job, has been pushing back on some of the book's claims.
“This Orpea system, which would consist in optimizing profit by rationing our services, existed nowhere in our nursing homes,” he told a parliamentary hearing on Feb. 2. “There are incidents in every nursing home -- perfection doesn't exist in this business. When there are incidents, we obviously follow them very, very closely, we report them to the health authorities, we carry out investigations and we correct them.”
Orpea Resumes Slide as Analysts Say CEO Change Is Not Enough
Charrier, a former Procter & Gamble Co. executive in France, was Orpea's chairman at the time the 2020 bonus payments to Le Masne were approved by the board.
In deciding to make the payments, the board was “exercising its discretionary power regarding the level of attainment of quantifiable objectives, which it had reserved,” the company said in the filings.
Questioned on Thursday about the bonus payments to Le Masne, an outside spokeswoman for the company reaffirmed the board's view and said the decision was approved by shareholders at the Annual General Meeting in 2021. Any further action will depend on the results of the independent assessment, she said.
Le Masne is entitled to a severance-payment deal following his removal “corresponding to 24 months' gross fixed remuneration and annual bonus,” according to the filing.
Orpea said on Jan. 30 that the board will wait for the results of the independent assessment before deciding on his severance package.
At Korian, meanwhile, Boissard said she isn't expecting her compensation to rise anytime soon.
“My remuneration hasn't changed since I took the job six years ago and the size of the company has doubled since,” she said in a telephone interview on Friday. “I even cut my own salary when the pandemic hit. I don't think the context allows today for any evolution in my salary.”
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