Outgoing PSA/Peugeot-Citroen chief executive Philippe Varin would forego his current pension package following opposition from government ministers and labor unions. PSA has reserved EUR21 million ($28.5 million) for Varin's pension deal, of which EUR310,000 will be awarded annually for 25 years starting on his 65th birthday. The French government also dubbed Varin's potential full compensation of EUR7.75 million as "inappropriate," provided that PSA is cutting more than 10,000 jobs while struggling to rebound from the European market slump. Varin said he made the decision to forego his pension package out of “immense respect” for PSA employees. He acknowledged the "polemic and emotion" caused by his pension and remarked that PSA’s supervisory board would decide on the new terms of his exit after consulting a corporate governance advisory body in the French employers' organization.
French ministers and unions frowned at the fact that Varin would receive an annual EUR310,000 pension net of tax and social charges. PSA recently disclosed that Varin would be replaced in 2014 by former Renault COO Carlos Tavares as part of a plan to persuade Chinese partner Dongfeng Motor to provide more capital.
PSA and Dongfeng are currently in discussions to expand on their current collaboration as well as over a multi-billion-euro capital increase that could result to Dongfeng and the French government taking stakes in the French carmaker, sources familiar with the matter have told Reuters.
Just as practiced in PSA, Varin will receive no severance payment when he exits the carmaker. A spokesman for PSA remarked that unlike most of his counterparts at other major French companies. Varin has received no bonuses since 2011, adding that his pension arrangements are also more modest.