The sum of 12 million euros that Solvay wants to pay to CEO Ilham Kadri will be the highest cash bonus ever in our country for the CEO of a listed company.
It often happens that a top executive receives a bonus on top of his or her remuneration package. But the bonus for Kadri is exceptionally high by Belgian standards. She will receive the sum ‘in recognition of her exceptional efforts in the context of the completion of the unbundling project’, according to the notice convening the general meeting of December 8, where the shareholders must approve the split of the chemical group and the bonus.
Solvay explains this in an explanatory note
the proposal further by highlighting the way Kadri has led the group in recent years in a difficult economic climate, the efforts it has made towards sustainability and the value it has created for shareholders.
At Solvay it also sounds somewhat cryptic that the CEO had ‘other options’ and that keeping Kadri on board for the board of directors was one of the essential elements for the successful completion of the project and for leading the spun-off Syensqo branch . “She is on the radar of all international headhunters,” Solvay said. It is not known whether Kadri had a concrete offer to work elsewhere. But it seems to have played a role in this bonus story.
Solvay says it aligns its remuneration policy with that of comparable European chemical and industrial groups, such as Bayer, BASF, Lanxess and Air Liquide, among others. For the 2022 financial year, Kadri received a total remuneration – fixed and variable – of 4.81 million euros.
Ilham Kadri is on the radar of all international headhunters.
“From a social point of view, questions can be raised about such a high bonus,” says Xavier Baeten, professor at Vlerick Business School and specialized in research into the remuneration of top managers. “But if you put on an economic lens and see that Kadri has created 1.8 billion euros of value for Solvay’s shareholders since she took over as CEO, such a bonus is justifiable.” He does not think it unlikely that the bonus also serves to keep her on board as CEO. ‘Good female top CEOs are in great demand internationally.’
To ensure the success of the separation project, Solvay granted the 17 members of its executive committee 386,867 special stock options at the end of last year, a third of which were for Kadri. At the current Solvay share price, these options already provide it with a capital gain of 1.67 million euros.
The possibility of granting an exceptional bonus on top of the normal fixed and variable salary is included in the remuneration policy of many listed companies, including that of Solvay. “It therefore does not go against the principles of corporate governance in companies,” says Baeten.
It is in line with a practice that also exists in other European countries. “In many cases, the awarding of an exceptional bonus is linked to special events in the company, such as a major acquisition, an important divestment or other special projects,” says Baeten.
This is also not unusual in Belgium. Last year, the insulation group Recticel gave its then CEO Olivier Chapelle an exceptional bonus of 3.5 million euros for the strategic transformation he achieved at the company. Christian Reinaudo, as CEO of Agfa-Gevaert, received an extra €3.83 million for the sale of Agfa HealthCare’s IT activities in 2020.
The biotech company Argenx awarded its CEO Tim Van Hauwermeiren an exceptional bonus of 5.26 million euros in stock options in 2019. He received this because Argenx had overcome an important hurdle to bring a product to the market and because he had entered into a strategic partnership with the American pharmaceutical giant Johnson & Johnson.
To ensure the success of the demerger, Solvay granted 386,867 special stock options to 17 top managers at the end of last year, a third of which went to CEO Ilham Kadri.
His colleague Onno van de Stolpe, the CEO of the biopharma company Galapagos, saw the cash register ringing in a similar way that year. He received an exceptional bonus of 2.9 million euros for the research and development collaboration agreement that Galapagos concluded with the American Gilead.
In the spring of 2008, the financial group Fortis awarded its CEO Jean-Paul Votron a special bonus of 2.5 million euros following the takeover of ABN AMRO and for managing the bad American credit crisis. In the autumn of 2008, Fortis collapsed.
Two years earlier, Albert Frère, as CEO of the investment company GBL, accepted a bonus of 3 million euros as a ‘reward’ for the sale of his stake in the German media group Bertelsmann.
The largest bonus ever paid by a Belgian listed company, but not in cash, was received by AB InBev CEO Carlos Brito. A 2008 option package, linked to objectives to reduce the beer group’s debt after the takeover of American Anheuser Busch, has earned him more than 100 million euros since 2014.