April 7, 2014 / 7:43 PM / 5 years ago

Magna vows to stop founder Stronach's compensation at end of 2014

TORONTO (Reuters) - Magna International Inc (MG.TO), one of the world’s biggest auto parts makers, paid $52 million in consulting fees to billionaire founder Frank Stronach in 2013, but the company is stressing that his compensation will stop at the end of this year.

Austro-Canadian businessman and billionaire Frank Stronach gestures during an interview with Reuters in the village of Oberwaltersdorf April 22, 2013. REUTERS/Leonhard Foeger

Stronach, who started the auto parts giant in a Toronto garage in 1957, was paid roughly $900 million to cede control of Magna under a contentious 2010 buyout deal.

Under terms of that court-approved plan of arrangement, Stronach was paid 2.25 percent of Magna’s 2013 pre-tax profit. That rate drops to 2 percent in 2014, the final year of compensation.

“The Stronach compensation arrangements will not be renewed, extended or replaced with any other form of compensation,” Magna said in a circular filed in advance of its May 8 annual meeting in Toronto, underlining the word “not.”

Stronach was paid $47 million in 2012 and $38 million in 2011 for consulting services under the agreement.

He ceased to be an officer of the company in 2010 and resigned as a director in 2012. Stronach’s sole relationship with the company in 2013 was as a consultant, the company said.

The Austrian-Canadian quit the Austrian parliament in January, after founding a party that won only 6 percent of the popular vote and 11 seats in September elections.

After the payments to Stronach end, effective December 31, Magna will reduce the profit-sharing cap for senior executives to 3 percent of pre-tax profit from the current 6 percent.

The move is meant to “give shareholders the certainty that the profit-sharing percentage which had historically been paid to Mr. Stronach will not be allocated to anyone else,” the company said in its circular.

Magna Chief Executive Don Walker received nearly $19 million in total compensation in 2013, Chief Financial Officer Vincent Galifi received $7.6 million, and Chief Operating Officer Tommy Skudutis got $7.5 million.

Compensation for Chief Legal Officer Jeffrey Palmer was $5.5 million and Guenther Apfalter, president of Magna Europe and Magna Steyr, received $3.5 million.

Magna has more than 125,000 employees at 316 manufacturing plants and 84 development, engineering and sales centers in 29 countries.

Reporting by Susan Taylor; Editing by Paul Simao

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