Messier Faces His Critics at Meeting

His brash self-confidence beginning to fray at the cuffs, Vivendi Universal Chief Executive Jean-Marie Messier on Wednesday presided over an unruly shareholders meeting in which he repeatedly was forced to defend his regime against complaints on topics ranging from the dismal performance of his company’s stock and its muddled strategy to its perceived slights against French cultural pride.

Messier, 45, who has led the company’s transformation over the last two years from a water-and-sewage utility into the second-largest entertainment conglomerate in the world, exuded calm from his seat onstage at Zenith concert hall, a tent-like venue on the Paris outskirts usually reserved for rock concerts.

“I always retain my serenity no matter what the circumstances,” he said later.

He spent much of the meeting singing the praises of the company’s subsidiaries, which include Universal Studios, the market-leading Universal Music Group, and several European telecommunications and television companies.

But Messier acknowledged having “personally, involuntarily and clumsily contributed” to confusion about Vivendi’s corporate strategy by “trying to explain too much.”

That admission did not quell the indignation over the conglomerate’s mediocre results and disorder on the floor throughout the four-hour meeting.

Hecklers kept up a constant counterpoint to Messier’s remarks with cries of “Resign!” and “Liar!” evidently reflecting sentiment in France that Messier has reneged on commitments to shareholders as well as to French regulators. This year, Vivendi’s stock has fallen 40%.

Among the unhappy was Marie Larquet, a 68-year-old widow in Paris.

The value of her 20 Vivendi shares has fallen by 70% since she bought them three years ago.

“There’s too much wealth for some,” Larquet said, “and not enough for the workers.” For her, Messier’s style of leadership is simply “too American.”

The more than 5,000 shareholders in attendance had to pass through metal detectors before entering the meeting. A dozen riot police officers, wearing black uniforms and carrying helmets and batons, mingled with about 200 protesters who gathered outside the venue and handed out anti-Messier leaflets.

The shareholders signaled their discontent with more than words, defeating a new stock-option plan for management and a second proposal that would have allowed the company to raise new capital without giving shareholders first rights to purchase the new shares.

But they failed to overturn Messier’s most controversial recent act, the firing last week of Pierre Lescure as chief of Vivendi’s money-losing Canal Plus pay television operation. Lescure, a co-founder of the channel, was seen as a strong supporter of the preservation of French culture. The ouster won support by a 55% to 45% margin, far narrower than is typical of most management proposals.

Messier appeared to have fended off for now the first signs of a boardroom revolt. Board members were said to have privately discussed the possibility of replacing Messier in response to the Canal Plus crisis.

There also had been speculation that the board might limit Messier’s duties, forcing him to give up either his chairman or his CEO role. Instead, the board reaffirmed its support at a luncheon meeting with him Wednesday.

At one point during the shareholders meeting, board member Marc Vienot, former CEO of French investment company Societe Generale, rose to his feet at Messier’s request to assure shareholders that the board was behind him.

“If we were unhappy with Jean-Marie Messier we would have taken measures,” Vienot said.

Until recently, Messier had reigned as the toast of French corporate society and a standard-bearer in the march of French companies into the global marketplace. By last year, investors were showing rising dismay at Messier’s inability to clearly articulate his strategy, much less execute it. Vivendi shares have lost 50% in the last year.

Furthermore, Messier’s efforts to refashion his company as an American-style enterprise and himself as an American-style CEO infuriated his countrymen. His firing of Lescure exacerbated the furor over Vivendi’s perceived neglect of its French roots, provoking several French political leaders to threaten a government inquiry into whether the company was complying with its regulatory commitments.

At Wednesday’s meeting, Messier attempted to mollify his domestic critics, assuring the audience that Vivendi would “abide by all the commitments of the past, including [providing] content to the French film industry.”

But he strongly defended the firing of Lescure, many of whose supporters among Canal Plus’ work force were in the audience. Results for the first quarter of 2002 released Wednesday showed the pay television unit as the worst-performing group within Vivendi, losing $57 million in the first quarter of 2002 alone.

“Canal Plus was no longer performing as well as in the past,” Messier said. Under its new management. “we will build a creative and competitive Canal Plus, rest assured. But it has to be a success in creative terms and economic terms.”

Overall, Vivendi posted strong first-quarter results Wednesday, with a downturn in music operations more than offset by growth of the company’s telecommunications and U.S. film businesses.

Operating income for the company’s media and telecommunications assets jumped 27% in the period, to $387 million, compared with the same quarter a year earlier. Revenue was up 12% in the quarter, to $6.3 billion, compared with the previous year.

Operating income for the music group fell 61% during the quarter, to $24 million. “Their margins have held up better than their peers and were unsustainable,” said Michael Nathanson, an analyst at Sanford C. Bernstein. Among Universal’s artists are No Doubt, Blink 182 and U2.

One continuing bright spot for the company is Universal Studios, which benefited in the quarter from the box office success of Imagine Entertainment’s Oscar-winning “A Beautiful Mind,” among other releases.

Vivendi’s American depository receipts on the New York Stock Exchange declined $1.05 to $33.95 despite the better-than-expected quarter.

Analysts agreed that Messier still faces the task of defining his company and himself more clearly.

Messier “is a man between countries,” Nathanson said. “The U.S. doesn’t see him as American and the French don’t see him as one of them.”

Messier and his management team spent much of Wednesday’s meeting pleading for time to allow the investment markets to recognize the inherent value in its strategic changes.

“Our strategy is starting to show an impact, but not in our share price,” he said, attributing Wall Street’s disaffection with the stock to “the handicap of being less well-known, more complex and switching accounting systems” from French to American accounting standards.

But management also pledged to address some of the issues that have undermined the company’s stock, including its large debt load and concerns that Messier might continue spending heavily to make more high-profile acquisitions.

Messier said the company would make “no significant acquisition activity” in the coming year.

During the meeting Messier appeared visibly angry only once, when a shareholder mentioned that Vivendi board member Edgar Bronfman is president of the World Jewish Congress and then appeared to be preparing an anti-Semitic diatribe. Messier promptly cut him off.

“I will not tolerate personal attacks,” he said.

Despite the turmoil, Messier seemed pleased after the meeting. He said he had no intention of stepping down over the protest of his leadership. “I’ll be here for the next 15 years.”

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Times researcher Achrene Sicakyuz in Paris contributed to this report.