JOUY31

I would say it is not that simple and that there are many shades of grey. Without giving out proprietary information, PHG could limit the growth potential AF has on specific markets by simply highlighting opportunities of growth for competitors. Would it be in violation of his obligations other than the non compete clause? I don't think so. Would it adversely impact potential avenues of growth for AF? Quite possibly. 11K EUR (16K EUR including social costs) per month is a pretty cheap insurance policy IMHO.

I don't have any special interest in what happens to PHG nor do I have any fondness for what he has done to the medium-haul premium product . But for better and for worse, he is now part of AF's past. Making sure that he does not adversely impact AF's future is a more important concern than whatever happens to him or what I feel about his tenure at AF/KL.

Richelieu

Actually, I am very interested to know if he'll try to get discounted fare on public transportation to CDG.

brunos

I agree with you JOUY31.
I agree that a no-compete clause could have some value for AF (although for someone with such a bad vision of the market?). It also does make sense for other retiring AF top executives.

But I also understand the outcry about granting a 1.5 million indemnity after so much value destruction. Part of that 1.5 million is arbitrarily assigned to a no-compete clause and it is a bit funny that the public questions the 400,000 and not the whole bonus.
I am not an expert on French labor law, but I do remember that a CEO is on a "siège éjectable" and can be removed at will. PHG was already past retirement age (65), so he is simply owed his retirement package for having worked so many years at AF. The value destruction under his tenure has been huge (a few billions in equity value), nevertheless he gets a bonus of 1.5 million.
I agree that there are many other bad examples in the world, including in the USA. But the symbolic message is awful and does not improve AF image abroad.

JOUY31

I would definitely agree with you, brunos.

schlegfr

http://www.romandie.com/news/n/L039A...0520121838.asp
(apologies, in French!)

Moral is - partly - safe!

Fred

JOUY31

Note that this is a decision by the AGM, not the board of directors.

Richelieu

Since the government only owns 15,8% of the shares, I'd really like to know who voted against. Small shareholders* and unions?

*petits porteurs, but I don't have a clue what's the sanctionned term is...

orbitmic

I'd suspect so. I don't have any AF share but if I did as a small independent shareholder, I'm pretty sure I wouldn't want to give yet more money to someone I would perceive as having badly damaged my asset. I fully agree with brunos and JOUY31 about the symbolic message. We live through funny times right now, and there is no doubt that arguments and practices that were entirely unquestioned a few years ago now need to pass an additional 'apparent morality scrutiny'. I'm not saying that this is good or bad (it would be good if it really resulted in a new 'ethical' conception of business but I suspect it is more of an epidermic reaction to the crisis which is likely to die down as quickly as it emerged) but I think that it is a fact that people are making those sorts of judgements in their minds at the moment.

JOUY31

What happens now that the AGM has voted against the compensation for the non compete clause?

1) the clause and the compensation for the clause are still valid
2) were PHG to give back the compensation amount to the airline group, the non compete clause would be void and the airline possibly endangered
3) negotiating to scale down the compensation would not necessarily be useful because the amount is already quite low and it would (probably) not mollify those who oppose the compensation
4) donating the amount (or part of it) to a separate legal entity such as Fondation Air France would keep the non compete clause valid and probably satisfy the protesters; it nevertheless requires that PHG be willing to do it and that he has the liquidity to do it

brunos

Summary: nothing is changed but symbols are saved.
PS: That's the positive view

blairvanhorn

One wonders if this wasn't all negotiated/arranged in advance before the trumpeting of different ministers in the press ...

Richelieu

Boardmembers discovered that the shareholders that they are supposed to serve don't want large compensation packages given to people who failed at doing their job correctly. It wasn't apparent to them until that point if one listened to Jean-Cyril Spinetta, who was strongly in favour of this package. He'll be able to use this insight in the future, maybe resulting in a better social climate as the era of asking everyone to accept worse working conditions except management --- who keeps perks and large compensations despite failing at their job --- comes to an end and it doesn't at least worsen the perceived chasm between workers and shareholders expectations. Popular outcry, in general and outside Air France --- even Parisot thought PHG's compensation was out of line ! --- may lead to more ethical behaviour when it comes to determining compensations.

JOUY31

Apparently, this applies only to voting by people who are not present at the Air France/KLM AGM. For shareholders who participate in the AGM, they do have the choice to vote yes, no, or abstain.



This slide from Investir was taken for the vote on PHG's compensation for the non-compete clause. So, it does make a visible difference whether the state's representative abstains or opposes the resolution, provided he is physically present at the Air France/KLM AGM.

Live report by Investir

Richelieu

From the tally, with only 1,76% abstaining, it looks like the French government representative vote "no".

It's interesting that they have different voting bulletins for mail vote and physical vote.

JOUY31

Yes, I have no idea why?