EADS CE Louis Gallois has given up an annual bonus of more than 1 million euros for a second year running, the Airbus parent said, leaving him significantly worse off than his top American rival.
The Frenchman is paid a fixed salary of 900 000 euros for running the world’s second largest aerospace company after Boeing and was slated to receive an additional variable pay award of 1.14 million euros for 2009. EADS said in a notice on its website that Gallois had told the board of his decision to waive the bonus on March 8, when the company was about to announce a 763 million euro net 2009 loss caused by huge cost overruns on the Airbus A400M military plane.
EADS subsequently went ahead and announced the bonus in its full 2009 statements, but EADS said in an addendum published on Monday that Gallois had since formally waived the award. EADS did not give a reason for the decision but Gallois had already waived a larger bonus of 1.55 million euros the previous year after EADS posted a 2008 profit of 1.57 billion euros.
Gallois had asked the company to give the 2008 bonus to charity as a signal to staff at a time when the company was tightening its belt due to the recession. He is expected to return to the issue at a shareholder meeting on June 1. Gallois’s basic salary was unchanged from 2008.
His earnings are dwarfed by those of his counterpart at Boeing, James McNerney, who earned $19.4 million including salary, bonuses, stock options and pension changes in 2009, according to a March proxy filing. McNerney’s cash bonus based on annual financial targets rose 58.5 percent to $2.3 million.
The voluntary move also means Gallois, 66, a former civil servant and Socialist ministerial adviser who led state such as the SNCF railway, is paid less than some EADS group executives including the head of Airbus unit Tom Enders. His personal austerity has been welcomed by unions but has not been universally popular with EADS managers. “Not everybody on the executive committee is dancing with joy about this,” a company source told Reuters recently.
With the company losing money but rich in available cash, the composition of the formula used to calculate executive bonuses has also been a sensitive internal matter this year. The variable portion of top EADS salaries is derived half from a cocktail of operating earnings, cash and capital employed and half from bonus objectives given to each individual.
Gallois replaced Noel Forgeard as co-chief executive of EADS in 2006, initially sharing the role with Enders, to try to dampen a massive row over delays to the Airbus A380 superjumbo. One of his first tasks was to implement unpopular restructuring plans and he soon faced a political and media storm over an 8 million euro pay-off to predecessor Forgeard.
Gallois has taken a high-profile stand against excess stock options, which are a politically sensitive subject in France, and in 2007 he suggested sharing EADS dividends with workers. The decision to give up a new bonus emerged on the eve of salary talks between Airbus and French unions set for Tuesday.
Gallois’ mellow but straight-talking managerial style is partly credited with taming powerful unions at the planemaker’s main French factories, nicknamed the “Republic of Toulouse” by bosses, but there have been recent wildcat strikes over pay.