Vivendi to fight Messier pay-off

MEDIA group Vivendi Universal has vowed to fight a US court ruling that it must pay e20.6m (£14.5m) to former chief executive, Jean-Marie Messier.

The media and entertainment giant's current chief executive, Jean-Rene Fourtou, has vowed not to pay a cent to Messier, who negotiated the secret deal in July last year with two board directors. Messier was ousted after taking the group on a huge and near-fatal spending spree.

Fourtou's rejection of the pay-off taps into widespread public outrage over executive compensation and generous pay-offs at a time of rising unemployment in France and weak company performance.

'It is one thing to make money when things are going well,' said Sophie L'Helias, a specialist in European corporate governance. 'It's quite another when the company has done badly and people are being fired.'

French shareholders are angry that executive pay is climbing even as profits tumble. companies on the blue-chip CAC 40 index racked up losses totalling e20.1bn last year, compared with total profits of e1.32bn in 2001. Chief executives received pay rises averaging 13% in 2002 after an increase of 20% the year before.

Vivendi said it would use all legal options to avoid the payment, including an appeal and getting permission to withhold the cash pending the appeal. Its legal battle against Messier intensified this week when a Paris court hearing opened as part of its efforts to avoid the severance payment.

The company has the backing of stock market regulator the Commission des Operations de Bourse, which ruled that the Messier package was unlawful because it lacked board and shareholder approval. However, US authorities, including an arbitration panel and the New York Supreme Court, have backed Messier's claim.

The decisions highlight the differing standards in corporate governance between the US and Europe.

'Where there are two levels of governance standards, directors have a duty to use the higher level,' L'Helias said. European company law requires a greater level of shareholder approval and, if Vivendi's board had used its right of approval and insisted on putting the deal to shareholders, 'they wouldn't be in this mess', she said.

Vivendi has permission from the French courts to withhold payment and has launched a lawsuit against Messier, and his former number two, Eric Licoys.