Vivendi Universal has been ordered to pay €20.6m (£14.4m) to Jean-Marie Messier, its former chief executive, who is blamed for taking the company to the brink of bankruptcy.
The French media giant said it would use "all available legal actions" to fight the ruling. The company has been desperately trying to reverse the disastrous $80bn spending spree embarked on by M. Messier, the self-styled "ruler of the world".
M. Messier, 46, was ousted on 1 July last year, following a boardroom revolt. He has since been demanding compensation under the terms of what he said was an agreed pay-off. Vivendi has said he deserves "nothing". A New York arbitration tribunal has now supported M. Messier that a "termination agreement" between him and the company should stand.
The company said: "Although this agreement was never approved by the board of directors of Vivendi Universal, the arbitration panel ordered Vivendi Universal to pay M. Messier the aggregate amount of €20,555,342 provided for this agreement."
It is believed that despite the rest of the board turning on him, M. Messier refused to step down until the terms of a pay-off were agreed. Vivendi was under extreme financial pressure at the time, with an unsustainable debt mountain.
According to a new book on M. Messier - The Man Who Tried to Buy the World - he insisted on compensation worth about four times his salary.
The book quotes Edgar Bronfman Jnr, the board member who had led the revolt. According to Mr Bronfman: "His [M. Messier's] attitude was 'unless I get my money, I'm not going to call a board meeting'. But we couldn't wait until September [the next scheduled meeting]. My view was that, however repugnant it may be to give that cock sucker anything, it was more important to save the company."
Mr Bronfman said he believed this was "blackmail" and that an agreement negotiated under "duress" would not be valid ultimately. The exit deal for M. Messier was signed by a Vivendi official, but not by the board. "It was €20m or so to save a company with a €13bn equity value. I take that deal any time," Mr Bronfman said.
The pay-off demanded by M. Messier came in strong contrast to his previously stated views on the subject.
In his autobiography, M. Messier wrote: "The possibility of being fired by one's shareholders, whether as a result of a takeover of for any other reason, is one of the risks of being a chief executive. These special payments - the golden parachutes that we hear so much about - cannot be justified for executive directors. My contract has no such clause. I promise my board never to negotiate one."Reuse content