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Richemont signals HR shakeup after reports of bonus controversy

Business is reeling from impact of Covid-19 pandemic.
Image: Bloomberg

Richemont said it may make changes in top management after a report that the Swiss luxury-goods maker’s employees are frustrated about increases in senior executive compensation when most directors got pay cuts.

Richemont is reviewing its human-resource department, and it hasn’t made any decisions so far, the Geneva-based company said late Friday.

Earlier, Businessmontres, a website that covers the watch industry, said Sophie Guieysse, the head of human resources, is leaving the company.

Richemont’s business is reeling due to the Covid-19 pandemic. Swiss watch exports plunged the most in at least two decades in April as disease outbreak led to factory closures, shuttered shops and travel bans. Last month, Chairman Johann Rupert warned of “grave economic consequences” that could last three years.

Read more: Rolex, Swatch Slash Production in Watchmaking’s Worst Year

Richemont said it may make changes to its senior executive committee, which includes seven managers including Guieysse.

The company’s top management have a 20% reduction in base salary until further notice, according to a person familiar close to the company who asked not to be identified. Cash bonuses for this year have been reduced 25% from the initially planned amount.

The variable part of management compensation was increased last year because many stock options were out of the money, the person said. Senior management have specific performance criteria they need to meet in order to receive that portion of the bonuses.

Total compensation for the senior executive committee in the year through March increased 36% to 41.4 million Swiss francs ($43 million), according to Richemont’s annual report. That includes stock options that may have lost value and are dependent on meeting specific performance criteria.

Rupert’s pay, which the billionaire traditionally donates to charity, was cut in half this fiscal year, and he will make up the shortfall in donations personally.

© 2020 Bloomberg

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