Alcatel offers to tie CEO payoff to performance

Alcatel offers to tie CEO payoff to performance

Alcatel-Lucent, which posted a first-quarter net loss and warned on 2008 sales, will ask shareholders to vote on a proposal to tie its CEO's 6 million euro ($9.45 million) golden parachute to performance objectives, the Times newspaper reported on Tuesday.

The paper said that amid renewed talk that Chief Executive Pat Russo was about to be sacked, shareholders would be asked to approve a resolution at this Friday's annual meeting to award Russo the equivalent of two years' pay.

A spokeswoman at Alcatel confirmed the figure, which she said was part of a resolution first adopted at the company's 2007 AGM. She said this year's new resolution proposed to submit the compensation to performance targets.

"Six million euros correspond to the maximum amount of two full years of salary plus variable income," the spokeswoman said. "Given 2007 performance, her (Russo's) salary was 1.8 million euros out of a maximum amount possible of 3 million."

"This resolution of two years of salary was already adopted last year. The thing that changes this year is that this parachute is submitted to performance criteria," she added.

Russo will have to meet at least 90 percent of the performance target for sales, or 75 percent of the performance target for operating profit, according to the seventh resolution of Alcatel's AGM agenda, available on its website.

The French-American company has issued a string of warnings since it merged in 2006 amid fierce price competition from Asian rivals, merger-related costs and uncertainty over production integration.

This has wiped off about half of the group's market value.