France Rejects 6.6 Million-Euro Pay Deal for Alstom Ex-CEO

(Bloomberg) -- France's government led Alstom SA shareholders who voted against the 6.6 million-euro ($7.3 million) pay deal awarded to former Chief Executive Officer Patrick Kron, part of a state crackdown on top salaries at some of the country's biggest companies.

About 62 percent of investors opposed Kron's cash-and-shares package at Alstom's annual general meeting on Tuesday. Shareholders approved the pay of CEO Henri Poupart-Lafarge, who replaced Kron as head of the rail operator at the start of February.

Kron's deal doesn't “conform to the doctrine of the state,” a representative for the body that manages the French government's shareholdings said in e-mailed comments. Authorities are pushing for a moderation in executive pay across all companies, according to the statement.

The government is Alstom's biggest shareholder with a 20 percent stake. It has voted against paychecks for Renault SA CEO Carlos Ghosn and PSA Peugeot Citroen head Carlos Tavares already this year, although the French economy minister Emmanuel Macron has ruled out a legal ceiling on executive pay.

Taking Action

Alstom's board of directors will “assess the reasons for this vote” and “meet within a reasonable time frame” to consider what actions need to be taken, the company said. The vote was non-binding.

Kron handed over to Poupart-Lafarge after 13 years at the helm. One of his final acts was to sell most of the company's energy assets to General Electric Co. to focus on rail, and Alstom has since started legal proceedings with the U.S. company over the price of a rail-signaling business it bought as part of the deal. Also under Kron's watch, Alstom in 2014 pleaded guilty and agreed to pay a 720 million-euro fine to settle a bribery probe in the U.S.

Alstom shares fell 2.6 percent to 20.18 euros by the close in Paris, extending the year's decline to 28 percent. That values the company at 4.4 billion euros.

Kron's pay package included a fixed amount of 1 million euros for the 10 months through January and a 1.16 million-euro bonus. He was also awarded 4.45 million euros worth of shares following the completion of the sale to GE.

Paris-based construction services company Bouygues SA is Alstom's second-biggest shareholder with an 8.3 percent stake.

To contact the reporter on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net. To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, John Bowker, Ben Holland