It's very good to see the new CEO payout plan is based on executing the previous CEOs cost cuts by the end of 2013. Also, very nice to see that his stock/option incentives are tied to outperforming the top 11 competitors. If this doesn't provide Combes with enough incentive to right this ship, then nothing will.
Also, heard he continued his listening tour in U.S (California) this week and wrapped it up in China.
PARIS--Incoming Alcatel-Lucent SA (ALU.FR) Chief Executive Michel Combes will have a smaller bonus target than his predecessor, as he works to turn around the money-losing telecommunications-equipment maker.
But Mr. Combes will also have a shot at something departing chief Ben Verwaayen didn't: a severance package in the event he's booted out as part of a strategic shift or the sale of the company, according to compensation details the company disclosed Thursday.
Mr. Combes, who will become CEO on April 1 for a three-year term, will earn a EUR1.2 million base yearly salary, just Mr. Verwaayen did, the company said. But Mr. Combes's target bonus if he achieves his objectives is only 100% of his salary, compared to 150% for Mr. Verwaayen, according to a securities filing.
Details of Mr. Combes's compensation package, which also includes "performance units" based on stock and a pension, come just weeks after Mr. Combes was named to replace Mr. Verwaayen, who in his four-and-a-half year run has failed to turn a consistent profit. Instead, Alcatel-Lucent has found itself bleeding cash, especially in the business of making gear for wireless networks.
Last year, as Alcatel-Lucent's performance worsened, Mr. Verwaayen didn't win a bonus at all, after pulling in a EUR925,200 bonus in 2011, the regulatory filing said.
Mr. Combes's severance package, which would pay him a full year's salary, comes with a big string attached. In order for Mr. Combes to qualify for the payout, Alcatel-Lucent must post positive free cash flow for one full fiscal year under his watch.
Last year, Alcatel-Lucent had full-year cash burn of EUR679 million--its seventh consecutive year of negative free cash flow.