France's small shareholders slam Alcatel CEO payoff

PARIS (Reuters) - France's small shareholders slammed a 6 million euro payoff due to Patricia Russo, Chief Executive of loss-making Alcatel-Lucent, after 20 months running the world's No. 1 provider of fixed-line telecoms equipment.

Didier Cornadeau, president of French small shareholder association APPAC, said the payoff was excessive.

"It's another scandal. It's much too much...especially given the damage she has done," he said.

Alcatel-Lucent shares have lost more than 60 percent since Russo took the job and were up 2.1 percent at 3.91 euros by 6:43 a.m. EDT on Tuesday.

The departure of Russo and Chairman Serge Tchuruk is an apparent effort to draw a line under months of profit warnings.

Alcatel-Lucent defended Russo's compensation.

"It was passed by the annual general meeting in 2007 and is in line with market practice," an Alcatel spokesman said.

The timing of Russo's departure means she will not be forced to accept reduced terms under a "golden parachute" adopted by shareholders in May this year. She would only have become eligible for the new payment from January 1.

Tchuruk will step down in October, the company said.

He will not be compensated since he does not receive any salary for his non-executive chairman role on top of his board of directors' fees (about 100,000 euros).

However, he received 5.6 million euros in November 2006 just before he handed over his position as chief executive, the position he held at Alcatel, to Lucent chief Pat Russo. The two companies merged in December 2006.

A resolution passed at the group's 2007 shareholder meeting would give Russo two years' worth of fixed and variable income or other benefits if she steps down before the end of this year, the final date given for her departure.

Russo's fixed income stands at 1.2 million euros in 2008, unchanged from 2007, according to the group's annual report. Her variable income could bring this to 3 million euros per year.

Corporate perks tend to be unpopular in France, where the 8 million euros awarded to the head of Airbus parent EADS in the midst of a crisis over plane delays, ignited a full-blown political scandal during last year's presidential elections.

(Reporting by Jean-Michel Belot and Jessica Mead; Editing by Louise Ireland)