Messier’s Severance Claim Upheld

Cash-tight Vivendi Universal has been ordered to pay $23.5 million in severance and bonuses to former Chief Executive Jean-Marie Messier, architect of the sprawling media empire that the French media giant looks to dismantle.

A New York arbitration panel Friday rejected Vivendi’s claim that a severance deal worked out July 1, 2002 -- the day Messier was forced out in a boardroom coup -- was invalid because it was not approved by all of the directors.

The panel found that Messier was entitled to the compensation because the arrangement was contained in a “termination agreement” negotiated between Messier and two leading board members: Vice Chairman Edgar Bronfman Jr., who led the effort to oust Messier and is now bidding to buy the Universal’s entertainment assets; and Marc Vienot, a former French banking executive who has since resigned from the board.

“We find that Vivendi breached its obligations ... by not honoring the termination agreement,” according to a copy of the 14-page decision.

“Certainly Bronfman, who took the lead in negotiating the termination agreement on behalf of Vivendi, did not strike us as someone easily taken advantage of,” the arbitrators also said.

The American Arbitration Assn. panel, which included retired federal Judge Herbert J. Stern and Fordham University law school professor and former Dean John D. Feerick, also found that the company “had no legal basis” for withholding a previously agreed-upon bonus to Messier for the first half of 2002.

Vivendi said it would appeal the decision. “After reviewing the tribunal findings, Vivendi Universal intends to challenge this decision through all available actions, both in France and the United States,” the company said in a statement.

Reached Monday, Messier declined to comment.

He previously has acknowledged making mistakes but has denied any wrongdoing. He has portrayed himself as a victim of stock market rumors and French politics. Messier now runs his own investment banking and consulting business -- Messier Partners -- in Manhattan.

The decision, which stunned Vivendi insiders, is an unexpected victory for Messier and an embarrassment for his replacement, Jean-Rene Fourtou, who vowed last year that he wouldn’t “pay a penny” to Messier.

The decision also comes at an awkward time for Fourtou, who is focused on negotiating a deal to sell all or most of the Universal entertainment operation among a field of six possible buyers. The board is scheduled to meet today to sift through various offers from bidders that include Liberty Media Corp., Metro-Goldwyn-Mayer Inc. and investment groups headed by Bronfman and billionaire Marvin Davis.

Fourtou has blamed Messier’s uncontrolled purchase of media assets for turning a 150-year-old utility into an entertainment giant while amassing debts that last summer almost sank Vivendi.

The company’s avowed plan to appeal the panel’s decision could be headed for trouble.

When Vivendi and Messier began the arbitration proceedings in November, both sides agreed not to in “any way challenge, modify or set aside any award, decree opinion or order by the arbitrators,” according to the agreement.

A Vivendi spokesman declined to comment on the issue. But a source familiar with the matter said Bronfman felt pressured into signing the severance agreement because the company was collapsing and he thought it was crucial to end Messier’s faltering reign.

Meanwhile, the decision also sparked anger from shareholders who blame Messier for concealing the company’s financial crisis.

“It’s truly scandalous,” said Colette Neuville, who represents a group of French minority shareholders that lodged several complaints in French courts against Vivendi and Messier. “It’s not right.”

Neuville and other shareholders accused Messier of being a hypocrite because he has criticized other executives for seeking golden parachutes.

More than a dozen shareholder lawsuits have been filed against Messier and Vivendi, which also faces criminal and civil investigations in France and the United States.

Messier spent months trying to get the compensation to which he believed he was entitled.

During the arbitration process, he refused to move out of his $17-million Park Avenue penthouse at the end of December, as he had initially agreed. He and his family remained there until recently and refused to pay rent from January through March, citing a mold problem in the building.

In the decision, the arbitrators accepted that explanation and said Messier was not obligated to pay rent. But the panel denied his request that Vivendi provide him with an assistant and security for six months. Messier also must pay his own attorney fees.