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July 21, 2017

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Former Acer CEO paid US$43 million in severance

TAIPEI -- Taiwanese PC vendor Acer Inc. said Friday it has learned lessons from the departure of its former CEO and President Gianfranco Lanci to whom it made a huge severance payment.

According to Acer's 2011 annual report, the company paid NT$1.28 billion (US$42.9 million) in severance to Lanci last year, a record high in the PC industry.

"We paid the amount in accordance with international practices and the terms of his employment contract," Acer Chairman and CEO J.T. Wang explained to reporters on the sidelines of a shareholders' general meeting.

"The numbers were indeed high, but that was because that our board of directors hoped to settle the issue quickly by that time to avoid further turbulence in the company," he added.

After the resignation of Lanci in March 2011, Acer soon discovered high channel inventory and disputed accounts receivable in Europe, Middle East and Africa operations, which caused a one-time US$150 million write-off and resulted in operational losses.

Since the second half of last year, Acer has extended the inventory management to the channel side so as to accurately access the channel sell-out information, Wang said.

"We have learned a lot of lessons from this issue, so we have been improving our management systems, wage systems and auditing systems to prevent such a situation from happening again," Wang said.

Moreover, Acer had established a task force to take action against Lanci to protect shareholders and the company's interests, he said. Some actions are already in the legal process and cannot be discussed, he added.

Earlier this month, Acer said it had revised its remuneration system to strengthen its operational stability and growth and reduce the risks that can arise from its payment system for executives.

To enhance the remuneration practices for executives at Acer, the board of directors established a compensation committee last August and hired HR consulting firm Towers Watson to help develop executive remuneration guidelines in line with international benchmarking practices, the company said.

The new system is aligned with global best practices and will help the company better retain its talent, according to Acer.

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