Alcatel and Lucent move to protect executives

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Alcatel and Lucent are to announce a management agreement that would require an overwhelming board majority to remove either Patricia Russo, the incoming US chief executive, or Serge Tchuruk, who is expected to be named chairman.

The telecoms equipment groups have agreed a provision that would require a vote of no confidence by two-thirds of the combined Franco-US board to remove either Ms Russo or Mr Tchuruk in the event of any substantial strategic differences.

The board will be comprised of six Alcatel directors, six Lucent directors and two independent European directors.

The deal is likely to ease lingering concerns about whether Ms Russo, who currently heads Lucent, would have truly free reign as chief executive under the powerful eye of Mr Tchuruk, who has a reputation for being hands-on and who will continue to direct the $36bn merged company’s strategy as non-executive chairman.

By constructing the management agreement, Ms Russo will be protected from being removed from Alcatel’s legacy directors alone, and Lucent legacy directors would be unable to oust Mr Tchuruk. Other provisions are also understood to be in place to protect both positions.

Questions about the cultural differences between the French and US companies and the balance between Ms Russo and Mr Tchuruk were central to merger discussions from early on, according to a person familiar with the talks.

Some had speculated that Ms Russo was not likely to hold on to the chief executive position for long. Her appointment to head the merged company has been a crucial element in selling the merger as one of equals – instead of a takeover by Lucent of its larger rival Alcatel.

Mr Tchuruk has parted ways with at least two potential successors in recent years, but people close to him deny there will be a conflict between the executives. One adviser said the Alcatel chief had had his eye on Ms Russo for some time to follow in his footsteps and they have a good relationship.

She has earned a reputation as a strong communicator and helped turn Lucent around by acting quickly. In France, procedures generally take more time.

Both in the US and the UK, non-executive chairmen have guiding roles. In France, however, people in these positions have a much more active role.

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