France to get tough on 'golden parachutes'

8th June 2007, Comments 0 comments

PARIS, June 8, 2007 (AFP) - The French government plans to tighten the screw on "golden parachute" payouts for failing top executives in line with a campaign pledge by President Nicolas Sarkozy, according to a draft finance bill unveiled Thursday.

PARIS, June 8, 2007 (AFP) - The French government plans to tighten the screw on "golden parachute" payouts for failing top executives in line with a campaign pledge by President Nicolas Sarkozy, according to a draft finance bill unveiled Thursday.

Under the eight-chapter tax and finance bill, to be debated by the new parliament after this month's legislative election, severance packages for chief executives would by law become performance-linked.

The measures would be "very simple" Sarkozy told Le Figaro newspaper: "No performance, no bonus."

Executives' targets would be fixed when they took on the job and vetted by their shareholder assembly, which would vote on whether to authorise a payout when they left.

Chief executives currently in place would also have to conform to the new rules within a year, amending their contracts if necessary.

Sarkozy promised while campaigning for the presidency to outlaw golden parachutes after an outcry over a multi-million euro severance payment given to French aerospace executive Noel Forgeard, of Airbus parent company EADS.

Details of Forgeard's 8.5 million euro (11.5 million dollar) package were released after Airbus announced it would cut 10,000 jobs across Europe as part of a turnaround plan.

Politicians across the board called for Forgeard repay the money.

It was not the first or last time that a generous payoff raised fury in France.

Before resigning in 2002, Jean-Marie Messier, former head of French media giant Vivendi Universal, received a hefty 21-billion-euro golden parachute package.

And in April it emerged that Serge Tchuruk, the former head of French telecommunications equipment maker Alcatel, earned 8.2 million euros in 2006, including a severance package of 5.67 million euros.

Sarkozy has separately defended the "strategic choice" of some companies to pay their executives huge salaries, saying that this reflected the high-risk mandates that they undertake.

But his government plans to tighten rules on executive stock options: they would have to be approved by a company's workers' council and would require the firm to open up profit-sharing schemes to all workers.

It would also ban the practice of offering executives stock for less than its market value.

On Wednesday, Finance Minister Jean-Louis Borloo submitted the package -- part one of Sarkozy's ambitious economic and social reform drive -- to the State Council, which advises the government on legal matters.

If approved, it will be debated during a special session of parliament to be convened in late July, following the parliamentary election on June 10 and 17.


Copyright AFP

Subject: French news

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