By Paul Hodgson – Chief Research Analyst
Darty plc’s CEO, Thierry Falque-Pierrotin, will leave by “mutual consent” in December 2012. The press release announcing this makes no mention of the fact that the firm is facing a shareholder revolt over a payment to the CEO, originally made in 2009 when he joined Darty, then known as Kesa Electricals. It’s a typical US-style make-whole payment, compensating Mr. Falque-Pierrotin for unvested stock awards he left on the table at his former employer, French retailer PPR. While this should raise objections on its own, as I have said many times and most recently here, the situation was made more embarrassing by the fact that the company recently had to admit that the share award was not tied to TSR performance, as it had previously asserted. This is how the 31 August release puts it:
On joining the Company, Mr Falque-Pierrotin forfeited option and stock entitlements linked to his previous employment worth, at that point, at least €775,000. The remuneration committee, as part of his recruitment package, agreed at that time to compensate Mr Falque-Pierrotin through a one-off conditional share award, with the only condition to vesting being his continued employment with the Company for three years. The 2009 Annual Report and Accounts erroneously stated that a TSR performance condition also applied; this was not the case.
Of course, the time vesting criterion was met in January this year so, although he is leaving in December, he will, in theory, be leaving with the share award. Had there been a TSR condition attached to it, it is unlikely that this would be the case. Over the last three years, Darty shares have fallen from 140 pence to just over 50 pence, and the shares would have inevitably lapsed. Darty’s executive pay policy is rated an “F” by GMI Analyst.