While the company he built crumbles, Jean-Marie Messier could walk away with a $42.8 million send-off using Vivendi Universal’s cash.
Messier is setting up a sweet golden parachute for himself despite a boardroom backlash over his four-year rampage of running up debts to build a media empire.
In addition to a $17.8 million cash severance, the 45-year-old fired chief executive of Vivendi is working out a deal to have a $25 million loan forgiven, sources said.
The loan, which Messier used to buy an undisclosed number of Vivendi shares, was made by Societe Generale, whose honorary chairman is Marc Vienot, a Vivendi board member.
Vivendi guaranteed the loan, and Messier now wouldn’t have to pay it back, said the source.
Messier’s tumultuous tenure was also marked by fumbles in his investment strategy for the French conglomerate.
He lost about $850 million of the company’s money by gambling it in risky derivatives investments, according to industry sources.
Messier had made a bet that 16 million Vivendi shares held in the company’s treasury would rise due to his aggressive expansion plans. He sold options contracts to investors that he would buy their shares at $67. If the shares rose, he would make a killing because he would get to buy more stock at a discount.
But the shares slumped badly, forcing him to buy shares at $67, much higher than the market price.
“It cost quite a lot to get out of those contracts, and his board began to turn against him back then,” said the source.
Around the time of Messier’s derivatives gamble, Vivendi was worth $161 billion at its peak in March 2000. Currently, its shares traded here are valued at $17 billion.
His $850 million fumble also made for tough sailing in his acquisition binge. He bought 23 businesses worth $77 billion as he transformed the 149-year-old utility into a media company.
He bought publishing and advertising giant Havas, and used $34 billion in company shares to buy Seagram Co. to get Seagram’s control of Hollywood studio Universal and its big music group.
The unwinding of Vivendi would end Messier’s ambition of building a rival to AOL Time Warner Inc., the world’s biggest media and Internet company. Messier also made a $10.3 billion purchase of USA Networks Inc., a cable and entertainment company run by Hollywood mogul Barry Diller.
Diller took his part of the buyout in cash, and doesn’t own any Vivendi stock.