11.19.19

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Understanding Thierry Breton: Noël Forgeard and His “Golden Parachute”

Posted in Europe, Finance, Fraud at 10:36 pm by Dr. Roy Schestowitz

Overview

Understanding Thierry Breton

Further parts pending review and research


Forgeard in trouble
Wikileaks cables revealed that his German colleagues regarded Forgeard as an “over-ambitious maniac”.

Summary: The end of the first half of the Breton series; in this particular part we continue to cover the EADS scandal and the second half of this series will include the EPO connections (the vote in a plenary for Breton’s nomination is due 27/11)

When Noël Forgeard, the French co-CEO of EADS, was compelled to resign in June 2006 he received a severance package in the form of € 6.1 m euros in remuneration – more than two years’ salary – along with a non-competition indemnity package payable over two years which was worth an additional € 2.4 million euros.

This “golden parachute” was widely perceived as being overly generous and it caused public outrage in France and Germany, particularly among EADS/Airbus staff.

“The 2007 French Presidential election was in progress at the time and this combination of circumstances led to a heated political debate about executive remuneration in the land of “Liberty, Equality and Fraternity”.”The controversy was aggravated by the fact that details of the severance package became known in April 2007 at a time when the EADS group was seeking thousands of job cuts as part of a massive turnaround plan to recover from a two-year delay to the superjumbo that wiped some € 5 billion off its profit forecasts for 2006-2010.

Fabrice Remon, president of a minority shareholder association commented as follows: “It’s shocking about Forgeard because of the conditions under which he left. … What’s shocking in France is that the parachutes are independent of the performance of the executive.”

The 2007 French Presidential election was in progress at the time and this combination of circumstances led to a heated political debate about executive remuneration in the land of “Liberty, Equality and Fraternity”.

“During this time, a number of reports appeared in the French media exposing the role played by Thierry Breton in the “golden parachute” affair.”The Socialist candidate, Ségolène Royal, said that she was scandalized by the amount of the severance package and called Forgeard’s golden parachute “a scandal, a provocation, especially in this company, where the state is a shareholder”.

The centrist candidate, François Bayrou, said that such severance packages “damage the image of business” and he promised, if elected, to champion a law that would “require transparency in economics, decision-making in general assemblies, instead of a capitalism of convenience where everything is decided in small groups”.

Nicolas Sarkozy, the centre-right candidate who was eventually elected as Chirac’s successor, called on Forgeard to return his severance package calling the matter a “question of ethics”.

During this time, a number of reports appeared in the French media exposing the role played by Thierry Breton in the “golden parachute” affair.

Forgeard landing
As Foregard descends with his “golden parachute” he is greeted by an angry crowd of citizens and politicians brandishing a banner with the slogan “No to golden parachutes” which leads him to ponder that he would have been better off staying in his Airbus.

The current affairs magazine Challenges broke the story in April 2007 by revealing that Breton had out-manouevred Manfred Bischoff and Arnaud Lagardère of the Board of Directors who had been strongly opposed making a severance payment to Forgeard.

According to Challenges, Breton had personally intervened in favour of Forgeard and exerted pressure to ensure that he received his “golden parachute”.

EADS Directors
EADS Directors Bischoff and Lagardère – outmanoeuvred by Thierry Breton.

The story was quickly taken up by other media (here, here, here, here, here and here) and there were cross-party calls for Breton’s resignation from the Secretary of the Socialist Party, François Hollande and from the centrist Presidential candidate François Bayrou.

“In the end, Breton did not have to resign. He was left to serve out his term of office which ended shortly afterwards on 15 May 2007.”Challenges returned to the story in May 2017 a month after its initial report. It noted that Breton had strenuously denied that he had made any intervention on behalf of Forgeard and that he considered it “scandalous” that he could be suspected of such impropriety.

In the end, Breton did not have to resign. He was left to serve out his term of office which ended shortly afterwards on 15 May 2007.

However, despite a recommendation from the outgoing President Jacques Chirac that he retain the services of the “turnaround king” at Bercy, the President-elect, Nicolas Sarkozy, decided not to keep him on his team.

“…it is also possible that Sarkozy regarded Breton as a political liability at that point in time due to his alleged involvement in the “golden parachute” controversy.”
It’s not clear what exactly motivated Sarkozy’s decision to drop Breton. Some commentators attributed this to Breton being overly close to Chirac faction of the UMP which was at loggerheads with Sarkozy. However, it is also possible that Sarkozy regarded Breton as a political liability at that point in time due to his alleged involvement in the “golden parachute” controversy.

Whatever the truth of the matter may be, the ministerial career of “Chirac’s joker” came to an end with more of a whimper than a bang.

In the next part we will turn our attention to what Thierry did next.

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