Telecom Lead Europe: Alcatel-Lucent on Friday said fixed gross salary — of €1.2 million — to its new CEO Michel Combes will be the same as the previous CEO’s base salary.
The board decided to offer Combes, who will join Alcatel-Lucent as CEO on April 1, 2013, an annual compensation comprising two elements: a fixed gross salary of €1.2 million, and a variable compensation element directly linked to the transformation of the company.
Having posted a net loss in Q4, turnaround is the clear focus of the board. Alcatel-Lucent posted 1.3 percent decrease in Q4 2012 revenue to €4.096 billion. Its net loss was €1.372 billion in Q4.
Alcatel-Lucent in a statement said that the performance objectives and variable compensation level will be determined each year by the board upon recommendation of the Compensation Committee.
The target variable compensation will be 100 percent of Combes’ annual fixed compensation, should performance criteria be met at 100 percent. This bonus could reach a maximum of 200 percent of the fixed compensation should performance objectives be exceeded very substantially.
For 2013, Combes’ variable compensation level will be determined by two factors – 50 percent based on the Alcatel-Lucent Group’s 2013 operating profit and 50 percent based on achieving targets set out in The Performance Program announced on July 26, 2012.
The board also agreed the award of a total of 1,300,000 ‘Performance Units’, and indexed to the performance of the Alcatel-Lucent stock over three years. One third of these units will vest each year subject to the fulfillment of performance conditions, but will be unavailable until April 1, 2016.
Combes will benefit from the private pension scheme applicable to all corporate executives of the Alcatel-Lucent Group’s French subsidiaries to cover the portion of their remuneration exceeding eight times the annual French social security ceiling. Specific to Combes, this pension scheme is subject to additional performance conditions. He will not benefit from a supplementary pension scheme.
In addition, Combes will be eligible for a termination benefit in the event of a change of control of strategy. This benefit is equal to one year of Combes’ fixed and target variable remuneration and is subject to a performance condition consisting of the delivery of positive free cash flow for at least one fiscal year until the end of the CEO’s mandate.