Vivendi Gave Messier 10% Raise in 2002

Vivendi Universal gave then-Chief Executive Jean-Marie Messier a 10% pay raise last year, only to later oust him for putting the French media giant on the path of financial disaster.

In its annual report released Wednesday, Vivendi said it paid Messier $6 million in 2002 -- the same year Vivendi recorded a net loss of $25.5 billion because of massive write-downs in the value of its media assets.

Messier was ousted from the company in July after leading a three-year acquisition spree that puzzled investors and left Vivendi with crippling debts that nearly forced it into insolvency.

The new management team refused to pay Messier any severance.

Separately, Vivendi also said Wednesday that it was confident it would not get stuck with a $2.7-billion tax bill stemming from a longtime dispute with the Internal Revenue Service.

The liability was inherited from Seagram Co. when it sold 156 million shares in DuPont back to the chemical maker in 1995 for $8.8 billion.

Proceeds from the transaction helped finance Seagram’s acquisition of MCA Inc., former owner of the Universal movie studio, theme parks and record company.

The IRS has disputed Seagram’s tax treatment of the deal, seeking $1.5 billion in additional taxes and $1.2 billion in interest. Vivendi said Seagram and the IRS have been in discussions since 1998, and the matter is before the IRS’ appeals division.

Vivendi contends that the deal complied with tax laws at the time, and that it disclosed the matter in public filings and had accounted for the potential liability. Some analysts, however, were surprised by the disclosure, and said the tax payment could affect their valuations of the stock.

Vivendi could face other potential tax liabilities as it seeks buyers for its U.S. holdings.