Why Ghosn’s Renault paycheck depends on EV sales

PARIS — Renault CEO Carlos Ghosn has a new incentive to promote development and sales of electric vehicles: A significant part of his pay now depends on it.

Ghosn, who has led Renault since 2005, was formally named to another four-year term by shareholders on Friday. However, his mission has been significantly altered. Earlier this year he handed off day-to-day operational duties to Thierry Bollore, and he agreed to a 19 percent reduction in base pay, to 1 million euros in 2018. The 64-year-old Ghosn’s mandate now is to prepare the Renault-Nissan-Mitsubishi alliance for a future without him at the helm.

The Renault Electric Z.E. Range (Image: Renault)
The Renault Electric Z.E. Range (Image: Renault)

Ghosn’s compensation has been a point of contention in France, with the government (which holds 15 percent of Renault) and significant number of shareholders arguing that he is overpaid, because he receives a separate salary from Nissan. After he lost a non-binding vote on pay in 2016 (and with this year’s vote binding), Renault’s compensation committee held more than a dozen meetings “to better understand this negative outcome.”

In addition to cutting Ghosn’s base pay, his long-term incentives will be reduced to a total of 80,000 shares from 100,000 (Renault stock has been trading at about 84 euros recently). Until this year, his performance targets have been conventional, equally divided among operating margin, free cash flow and shareholder return.

Those targets represent an automotive industry that was more focused on current performance than future adaptation. Recognizing that, the board has changed the criteria to better align with new strategic plans for Renault and the alliance, which call for doubling synergies from the alliance and ramping up EV vehicle sales.

Read more: Autonews via Fuel Included News