Ghosn Forgoes Bonus, Rejects COO’s Resignation As Renault Spy Case Fizzles
Renault SA Chief Executive Officer Carlos Ghosn gave up his bonus and turned down second-in-command Patrick Pelata’s resignation after wrongfully accusing senior managers of spying in a case that has become a personal embarrassment for the top two executives.
Ghosn said in January he was directly involved in the internal probe and that the carmaker had an abundance of evidence. Pelata said earlier this month that he would take responsibility if it turned out the accused were innocent, reported Bloomberg.
Renault’s mishandling of the espionage affair has weakened the CEO in a tussle with the French state, its largest shareholder, over the carmaker’s future, four people familiar with the matter said. Ghosn’s decision to keep Pelata, who has worked closely with the CEO since 1999, also highlights Renault’s lack of succession planning, analysts said.
“It’s a mess,” said Rebecca Lindland, an analyst at IHS Automotive in Lexington, Massachusetts. “It’s obviously a huge amount of embarrassment for the company and for Ghosn.”
Renault fell as much as 1.52 euros, or 4 percent, to 36.65 euros and was down 3.9 percent to 36.68 euros as of 9:15 a.m. in Paris trading. The shares have dropped 16 percent this year, valuing the automaker at 10.9 billion euros ($15.2 billion).
The French carmaker yesterday also announced disciplinary action against three of its security officers and pledged to compensate and reinstate the three executives fired on suspicion of selling company secrets.
Pelata’s resignation was rejected “in the interests of Renault,” the CEO said on TF1 television. “I didn’t want to add crisis to crisis.” Ghosn, Pelata and other executives involved in the case will return 2010 bonuses and receive no stock options this year, the company said after an emergency board meeting late yesterday.
Pelata, 55, graduated from France’s elite Ecole Polytechnique in the same 1974 class as Ghosn, before joining Renault as head of bodywork assembly at the carmaker’s plant in Flins, west of Paris. In 1999, when Ghosn was sent by then CEO Louis Schweitzer to rescue Japanese affiliate Nissan Motor Co. from near-bankruptcy, he took Pelata with him and the two have worked closely together ever since. Pelata took over day-to-day control from Ghosn in 2008.
The departure of Ghosn’s No.2 would have left Renault “without an operating manager” and no obvious successor, Philippe Houchois, a London-based analyst with UBS, said before the announcement. The carmaker “hasn’t done a very good job of managing succession, and Pelata is one of the few people who can hold his own against Ghosn when necessary,” he said.
The carmaker retracted its espionage claims yesterday after Paris Chief Prosecutor Jean-Claude Marin said they had been discredited by police. Pelata had pledged earlier this month that managers would be held accountable “all the way up to me” if the three were cleared.
Upstream development chief Michel Balthazard, his subordinate Bertrand Rochette and deputy electric-car program chief Matthieu Tenenbaum were fired in January after a company investigation concluded they had received payments from Chinese companies via foreign accounts.
Renault’s u-turn came three weeks after Ghosn presented a medium-term plan to narrow the profitability gap with Volkswagen AG, telling investors that Renault-Nissan’s capital structure “can change over time and probably will.”
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