saraoutou

Humoristic:
Is there any airline going to give a job to PHG taking a look on his AFKL results ???
So why pay him this compensation ?

JOUY31

There were reportedly at least two offers for PHG to become a member of the board of directors of an airline.

PHG's compensation for the non compete clause represents an amount of 11K EUR per month, which does seem to have been very well negotiated by the airline. In comparison, Anne Lauvergeon's 500K EUR compensation from AREVA for a 2-year non compete clause amounts to over 20K EUR per month.

According to case law by French courts, compensation for a non-compete clause for salaried staff (which is not PHG's case but the case law could be extended to his case) should not be lower than a threshold that varies between 1/3 and 1/2 of the last salary. The amount that is required increases with the risk to the company, measured for example by the level in the organization or by specific skills highly valued on the market. The compensation can also be defined above these thresholds by industry sector agreements (conventions collectives).

JOUY31

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On a lighter note, the thread title has a different meaning, depending on the language you believe is being spoken (English or French) .

Richelieu

I was referring to the document and voting procedure for Air France shareholder meeting. Admittedly, I was referring to the 2007 edition, but I don't think they have changed their voting procedures since.

After checking of AF's website, they have changed marginally (or my memory are decidedly not what it used to be):

You either do nothing and vote yes, or check the box to both abstain and vote no without distinction. Except you don't have to blacken all the boxes if you're OK with everything. Only yes vote are tallied.


I missed the pun?

JOUY31

Poor PHG vs Pour PHG

Thanks for the update .

orbitmic

orbitmic

I think that last time someone asked: "Pour Pierre-Henri Gourgeon?" at Air France, there was a dead silence in the room!

brunos

Indeed. Thanks JOUY31 for clarifying. The original press releases talked about decisions of the Board of directors and how its representatives would vote. But it will now be an issue for the AGM if the Board decides (has decided) to make the controversial proposition to the shareholders.
I was not aware that French companies required the AGM to accept such compensation package. In US, this is a new requirement but AGM votes are only "indicative" and without real effect except symbolic.

Richelieu

AGM should vote to approve contracts between the company and their CEO. In this case however, it would be complicated to get the money back from Gourgeon. Symbols are important though, and if the majority of shareholders is against, it may be a @:-) for boardmembers in the future.

brunos

Fully agreed. IMO any attempt to use French laws or tradition to defend PHG compensations is a bit pathetic and reflects on the power of the networking and support of political-appointed technocracy.
That being said, I am surprised that the contract of a top-management employee of AF does not routinely include a no-compete rule for a specified period.
Another point that amazes me is how JCS has been allowed to stay. He is clearly a great manipulator as he has been able to deflect all criticisms toward PHG. But JCS was CEO till 2009 and then Chairman. It takes time to design and implement business plans. The dreadful results that we have seen in the past couple of years come from a strategy designed during his tenure as CEO. Some recent worsening of the products might have been decided by PHG, but as Chairman JSC did not object to them and they are the continuity of the strategic plan initiated in the mid-2000.

JOUY31

I would personally disagree. As mentioned in the press, PHG has a vast knowledge and understanding of the inner workings of the airline. Providing insight to another airline by becoming a member of the board of directors, or worse, to several airlines by working as a consultant, could further erode AF's competitiveness on specific routes or markets.

http://www.challenges.fr/entreprise/...te-versee.html

In short, I personally believe the Air France/KLM board was right in imposing this non compete clause to PHG, and that it has done so quite cheaply - 11K EUR (+ social costs) per month, less than the cost of a senior pilot. It may not be politically expedient, nor does it make social negotiations easier, but the financial cost is far outweighed by the risk to the airline IMHO.

orbitmic

I think it is just a jeu de dupe. On the government part they just don't want "to be seen" supporting the package after claiming they were going to fight golden parachutes and all related practices of highly compensating sacked leaders of large companies (whether public or not). On the AF side, this is a pathetic measure, ultimately I think it just means that JCS and PHG 'made a deal' to avoid a complete scandal when PHG was toppled and that now the company is trying to save JCS's word (and more ) by giving cash to someone who should have been let to go to the competition if they so desperately wanted him. There is full legal protection for everything that matters (the knowledge of AF plans and ideas) without need for compensation and PHG knows perfectly well that even if he worked for U2 or the like, he would be in huge trouble if he breached those.

brunos

You point make sense. Again, I am very surprised that such a non-compete clause was not an integral part of PHG original appointment contract as CEO.

The indemnity voted by the Board in october 2011 is detailed in the "Registration Document 2011" (page 26), linked on:
http://www.airfranceklm-finance.com/en

Apparently PHG was granted a total indemnity of EUR1,525,000, including a 400,000 compensation for a three-year no-compete obligation. I have no intent to discuss whether this indemnity (plus shares) is too high for such a miserable performance. Maybe the AGM will think so.
You raise the question whether 400,000 is a fair amount for 3 years of no-compete. First, it would be useful to know what the clause really is. Does it preclude PHG from seating on some boards? But it will certainly preclude him from being a consultant to another airline. In any case, he would not have been legally allowed to reveal any information about AFKL, so only his general expertise in the industry would have been useful. There are many retired/fired airline executives, some with better track record. Is it worth 400,000?

Richelieu

The article mixes non-compete clause and not divulgating information he learnt during his work at Air France. Even without NCC, it would be illegal to do that. Such obligations exists even after the labour contract terminations. If he was disposed to do that, as the article alledges, the NCC wouldn't prevent him for doing that: if he was ready to violate obligations stemming from the work contract, inserting NCC into the work contract wouldn't change anything. The purpose of NCC is preventing one to put his remarkable talent in the service of other, not preventing the spread of confidential information.

If one assumed he would happily start selling insider information and needed a cash payment to accept not doing so, then he would certainly be justified in paying PHG. But they should call that extorsion money, not NCC clause. Even with his poor performance, I'd give PHG the benefit of the doubt and assume he was honoring his work contract...

Note that it comes from a boardmember: it's probably some spin on the information to make their decision look legitimate in the eye of the (uninformed) shareholder ahead of the vote.

Most of it was certainly negociated before he started to work.

orbitmic

Agree with every single word...