Executives to appeal against repaying predecessor's pay off

16th December 2008, Comments 0 comments

French chemical firm Rhodia’s executives will lodge an appeal against having to reimburse their predecessor’s gold parachute of EUR 2 million.

PARIS – The French chemicals firm Rhodia said on Monday that two executives would appeal against a commercial court ruling that they must personally repay a predecessor's two-million-euro severance package.

Rhodia said the Nanterre Commercial Court had ordered on 3 December that Rhodia chairman Jean-Pierre Clamadieu and his predecessor Yves Rene Nanot reimburse the cost of Jean-Pierre Tirouflet's golden parachute.

According to the firm, the court found there was nothing improper about the October 2003 pay off in itself but ruled that Nanot and Clamadieu ought to have questioned the payment at the request of one of Rhodia's shareholders.

"This ruling therefore means that they should have contested a posteriori a settlement agreement whose terms were upheld by the same court," Rhodia said, in a statement to the media.

"Mr Nanot and Mr Clamadieu will naturally appeal this decision, making it therefore unenforceable," it added, noting that Rhodia's board had met after the ruling and expressed its continued full confidence in the executives.

Amid the global economic slowdown, the practice of handing departing company executives generous retirement packages has become politically controversial in France, and has been criticised by President Nicolas Sarkozy.

Tirouflet left Rhodia in 2003 after five years at the head of the company. He received a parting "retirement bonus" of EUR 5.3 million in addition to his severance payment of EUR 2.1 million.

He left the company at a time when it was in financial crisis. A large shareholder, the Belgian firm Valauret, complained about the size of the pay-off, eventually launching a legal challenge in 2005.

According to Rhodia, the court decided the payment itself was legitimate but "nevertheless criticised Mr Nanot and Mr Clamadieu for not subsequently contesting this payment, even though it was found to be regularly made."

Separately, Tirouflet is under investigation over allegations that he had misled financial markets over the extent of Rhodia's liabilities when it was floated on the Paris stock exchange in 1998.

Complaints were lodged against him by two shareholders; banker Edouard Stern who was murdered by his mistress in February 2005, and financier Hughes de Lasteyrie, who died of a heart attack in July 2007.

Valauret is now acting on the deceased plaintiffs' behalf.

[AFP / Expatica]

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