Renault CEO tells shareholders that EV spinoff has strong potential

PARIS -- Renault’s internal audits show strong potential for the automaker’s plans to separate its electric-car unit from traditional fossil-fuel operations, CEO Luca de Meo told shareholders.

Speaking at Renault Group’s annual general meeting on Wednesday, de Meo said one outcome of the project would be to “correct the group’s valuation.” He said the plan was not to divide the company in half, but to create two separate entities with about 10,000 employees each, with a potential partnership on the internal-combustion side.

The French automaker is one of several – including Ford and Geely – that are rethinking how internal-combustion vehicles fit into their future strategic plans, to keep up with Tesla and other “electric native” automakers.

The EV operation would be centered on France, while internal-combustion activities would be at sites outside of the country where Renault already builds most of its non-electric vehicles.

“All of the research and studies that we have done have already confirmed the very strong potential of this operation,” de Meo said, adding that “all options are still on the table.”

Renault has received several partnership offers already for its internal-combustion activities, according to news reports this week. The automaker will present more details at a capital markets day in September.

Shareholders also approved de Meo’s 2021 compensation package, worth 4.74 million euros ($5.06 million), in his first full year as head of the French automaker.

De Meo’s fixed compensation was 1.3 million euros. His variable compensation was 1.89 million euros, slightly less than the maximum 150 percent of base salary. Long-term compensation was 75,000 performance shares, with a value of 1.55 million euros at the end of 2021.

His predecessor, Thierry Bollore, now head of Jaguar Land Rover, had a smaller pay package consisting of 900,000 euros fixed pay, a maximum 125 percent of base salary in fixed compensation and 50,000 performance shares.

CEO pay has long been an issue in France. Former Renault CEO Carlos Ghosn, who was ousted after his arrest in Japan in 2018 on charges of conspiring to hide future compensation at Nissan, was regularly criticized by the French government for his pay. 

Stellantis CEO Carlos Tavares – a former chief operating officer at Renault under Ghosn – was also the subject of scrutiny this year, as executive pay became a hot topic in a tight French presidential race focusing on economic issues.

Tavares’ 2021 compensation package was about 19 million euros ($20.5 million), plus a stock package worth some additional 32 million euros and long-term compensation of about 25 million euros. Much of that was tied to a bonus following the completion of the merger between PSA Group and Fiat Chrysler Automobiles that created Stellantis in January 2021.

Ghosn's annual compensation at Renault, as both chairman and CEO, was over 7 million euros for a number of years until he accepted a 30 percent pay cut for 2018, when he received a total of 5.5 million euros. His total compensation from the Renault-Nissan alliance had topped $15 million in some years.

Following Ghosn’s arrest, Renault divided the CEO and chairman functions, with former Michelin chief Jean-Dominique Senard serving as chairman since 2019. Senard will receive 450,000 euros for his 2021 duties.

There will be a modification of de Meo’s variable compensation criteria in 2022, with CO2 compliance replaced by sales penetration for electrified vehicles, although the total potential amount – 150 percent of his base salary – remains unchanged.

Reuters contributed to this report