The infighting at Gemplus International SA, the world’s largest smart card vendor, shows no signs of abating, but following a weekend board meeting, an agreement was reached that it must trim 1,000 positions, or 15% of its 6,500-strong workforce.
The workforce reduction, 483 of whom are in France, is part of a global restructuring plan expected to save 100m euros ($100.7m) this year, which should rise to more than 200m euros ($201.4m) in 2004 when the full impact of the current cuts will be felt.
The company has also has hinted that there could be further job cuts on the way. Today’s reductions follow a headcount cull last year, when it axed 1,149 positions.
Gemplus is the world’s largest maker of smart cards, used in everything from mobile phones to drivers’ licenses. The company has been badly hit by a fall in demand from the mobile phone industry and rising competition in Asia, and has posted six losses in the past seven quarters totaling 323.3m euros ($323m).
For the last two years the company has been stricken by internal management disputes. The current CEO, Alex Mandl, has been attacked by both unions and French shareholders, who have accused Texas Pacific Group, the company’s biggest shareholder, of bringing in Mandl to break up the group to pass on its technology to the United States.
Following the board meeting at the weekend, reservations were expressed about the size of Mandl’s compensation package, of 600,000 euros ($604,000) base salary per year, plus an annual performance bonus of up to 120%. Additionally, as part of his four-year contract, Gemplus pays monthly bills of $80,000 for the maintenance of Mandl’s US home until it is sold.
Most analysts agree that Mandl’s compensation is fairly middle of the road for a US executive of his experience and expertise, but the package puts him in the same league as some of France’s best rewarded executives. Following a request from his fellow board members to reconsider his package, Mandl admitted he would review his pay packet, without giving any further details.
The news of the job cuts follows on the announcement that Gemplus has been lumbered with a 40m euro ($40.4m) back-tax bill in a row over where the company is based, after tax authorities disputed Gemplus’s claim to have moved its headquarters to Luxembourg in December 1999.
Last week, founder Marc Lassus sold his 10% stake in the company to Sagem SA, a French maker of defense and telecom products, for approximately 55m euros ($54.9m). Sagem acquired the 10% stake from banks, which were holding Lassus’s shares as collateral against unpaid loans.
Lassus and fellow director Ziad Takieddline had been under threat of being fired from the board ever since allegations surfaced that they disclosed information about board directions to the media. Shareholders had been due to vote on December 19 on whether to fire them.