SNY Sanofi

PARIS—Renault SA's board on Wednesday said it would reduce the next pay package for its chief executive after the car maker's dismissal of a shareholder vote against his 2015 compensation triggered another salvo of outrage against executive pay in France.

The board approved a recommendation by the company's remuneration committee to cut the variable share of CEO Carlos Ghosn's salary by 20% and cap it to 180% of the fixed salary, Renault said in a statement. The company also changed the way the variable part will be calculated.

At the company's annual general meeting on April 29 in Paris, more than 54% of shareholders voted against Mr. Ghosn's pay package of €7.3 million ($8.1 million) for 2015. A total of 45.9% approved the package, while less than 1% abstained. The vote was nonbinding, however, and Renault's board decided to maintain Mr. Ghosn's pay package.

The CEO's pay was flat last year after almost tripling in 2014.

The outrage that followed the board's decision to override the shareholder vote led a group of French legislators to start discussing a new bill limiting executive pay. The issue was made more sensitive by the fact that the French state is Renault's largest shareholders after it increased its stake to around 19% from 15% last year.

French Economy Minister Emmanuel Macron and other top officials had criticized the board's April decision.

A few weeks before, other ministers had criticized Groupe PSA CEO Carlos Tavares after his pay almost doubled to €5.3 million as a reward for his efforts in turning around the company.

Other top managers of French companies such as Sanofi SA, Alstom SA and Alcatel-Lucent have been under harsh criticism for getting fat paychecks that some found contradictory with the performance of the companies they headed.

In the wake of the spat and in a bid to defuse the conflict, Renault's management decided to ask the remuneration committee to carry out a wide consultation of shareholders on the issue. The conclusions were that shareholders wanted Mr. Ghosn to remain at the helm of the company and that his remuneration was "coherent" compared with that of his peers, though changes were needed.

Beside the cut in 2016, Mr. Ghosn also told the board he will donate €1 million a year from his salary to the company's foundation particularly to help finance education of unskilled youth and help schools in areas struck by natural disasters and crisis situations.

Write to Inti Landauro at inti.landauro@wsj.com

(END) Dow Jones Newswires

July 27, 2016 19:05 ET (23:05 GMT)

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