The outgoing head of France's loss-making, state-subsidised carmaker PSA Peugeot Citroen said Wednesday he was giving up his 21-million-euro golden parachute after outrage from unions and lawmakers.
"I have decided to give up the current provisions of my pension rights," Philippe Varin said at a press conference in the PSA headquarters.
Against a national background of record unemployment and many French workers being obliged to accept wage freezes to retain their jobs, Varin's payout had widely seen as an example of unacceptable executive largesse, and criticism had spanned the French political spectrum.
Peugeot announced on Monday that Carlos Tavares, the former number two at French rival Renault, would succeed Varin next year.
Varin said he made the decision to renounce his payout "considering the polemics this subject has sparked, (and) that the emotions in our country need to be united not divided today".
French President Francois Hollande immediately welcomed his decision.
"It was a wise decision, that is the least one can say," Hollande said during a visit to Spain.
He added "it was also the only possible one given the situation of the company, the efforts -- not to mention the sacrifices -- Peugeot employees have been asked to make, and also taking into account the guarantee given by the state" to prop up the carmaker's loan arm.
Focused heavily on Europe, Peugeot has seen its fortunes sour since Varin, 61, took charge in 2009. Sales in the region slumped under the impact of the global financial crisis then the eurozone debt crisis.
The company has launched a radical restructuring involving deep job cuts and the closure of a factory, with remaining workers having their pay frozen.
It needed to be rescued last year with 7 billion euros ($9.5 billion) in state guarantees for its financing and credit arm, and posted a record loss of five billion euros ($6.8 billion).
Peugeot concluded a strategic alliance with General Motors last year, with GM taking a 7 percent stake in the French carmaker. There has also been persistent speculation that it was seeking a capital injection from China's number two carmaker Dongfeng.
Varin, who has not actually indicated he would leave Peugeot next year, had initially tried to defend the lucrative leaving clause.
"When I leave the company, when that time comes, I will not receive any severance pay," he told France Info radio, noting that the 21 million euros would be used to fund a 300,000 euro annual pension and it would not be provided in a lump sum.
Varin later said he would leave it up to the company's board of directors to decide on what would be an appropriate retirement payment.
The government had made it abundantly clear that 21 million euros was not a justifiable figure, with Finance Minister Pierre Moscovici calling it an "inappropriate amount".
Other politicians used words like "obscene", "scandalous" and "unjust".
Malek Boutih, an outspoken lawmaker from Hollande's ruling Socialist party, complained that ordinary French people were being "asked to tighten their belts while we are offering 21 million euros to this man".
Former minister Bruno Le Maire, from the opposition centre-right UMP party of ex-president Nicolas Sarkozy, said the sum was deeply inappropriate.
"To leave with a pension of this magnitude when one has failed as the head of Peugeot, when one has not been able to save jobs, when one has asked employees to make sacrifices, I find all this simply indecent," he said.
Unions also denounced the size of Varin's golden handshake.