Magna International Inc – which is currently one of the largest auto suppliers in the world – has announced it has decided to end paying at the end of this year the compensations to its founder – Frank Stronach.
Stronach – of Austro-Canadian origin – has become a billionaire businessman after it first based its auto parts company in a Toronto garage in 1957 and has ceded control over Magna in a contentious 2010 buyout arrangement, worth $900 million. Still, for the whole 2013 the company still paid Stronach no less than $52 million in consulting fees.
“The Stronach compensation arrangements will not be renewed, extended or replaced with any other form of compensation,” Magna announced in a statement before the May 8 annual meeting in Toronto.
The money it paid since 2010 were part of the deal to give up control, as the court-approved plan saw Stronach compensated further with 2.25 % of its 2013 pre-tax profit. The rate would drop to 2% this year, which is the final year agreed. Under the same agreement, he also received $47 million in 2012 and $38 million in 2011.
After the compensation agreement with Stronach ends, starting with 2015 the company would also lower senior executives profit-sharing ratio from the current 6% to 3%.