No bonuses for French state-aided firms
France is set to adopt a decree which will ban state-assisted companies from handing out stock options or bonuses.PARIS – France announced a ban on bonuses and stock options Thursday for the bosses of state-aided firms in response to public outrage over executive perks at failing companies.
"A decree will be adopted next week setting the conditions for a ban on stock options, bonuses or other advantages when companies receive help from the state," said President Nicolas Sarkozy's chief of staff Claude Gueant.
Sarkozy had this week threatened a law to cap bonuses and stock options at companies that lay off staff after receiving bail-outs from taxpayer money, days after more than a million workers took to the streets to contest his economic policies.
But Gueant told AFP that regulating by decree was "faster and easier" than putting a bill through parliament.
The issue of pay in state-assisted firms has become a politically toxic subject across Europe and the United States, where executives at bailed-out insurance giant AIG agreed this week to pay back USD 50 million (EUR 40 million) in bonuses.
The chairman and the vice president of French energy giant GDF Suez, which is 35.7-percent state owned, decided Thursday to give up lucrative stock options, the company said, after workers went on strike in protest.
The company is turning a profit and is getting no crisis aid from the state but the top executives decided to part with the benefits "in the interests of responsibility," said a GDF Suez spokesman.
GDF Suez workers near Marseille walked off the job Wednesday after the firm confirmed it had given stock options worth at least EUR 10 million to chief executive Gerard Mestrallet and vice president Jean-Francois Cirelli.
"This was the last straw," said a union representative. "We have a hard time swallowing this sort of announcement when we are constantly told that there is a crisis and no room for raising salaries."
In Britain, the former head of beleaguered bank RBS, Fred Goodwin, is resisting pressure to give up a million-dollar monthly pension, while the Netherlands and Sweden have taken steps to curb executive pay.
Sarkozy's government this week vowed to oppose a golden parachute for the departing boss of troubled auto supplier Valeo, Thierry Morin, who was awarded a multi-million-euro pay-off despite letting the firm sink into the red.
At the weekend, top executives at Societe Generale agreed to hand back thousands of stock options after the French president warned the perks were "unacceptable" given the aid enjoyed by the bank.
The Socialist opposition criticised Sarkozy for using the power of decree to ban bonuses rather than going through parliament.
"The real problem is that the government had refused until now to demand compensation for aid. Decreeing rules is not, despite the crisis, spontaneous with Nicolas Sarkozy," said Didier Migaud, chairman of the national assembly's finance committee. "He is using a decree because he needs to posture."
As the economic crisis bites and French job losses soared to reach nearly 2.4 million by the end of February, the government fears that anger in the workforce could spill over into social unrest.
Sacked workers on Thursday released the manager of a French factory run by US firm 3M after holding him for more than 24 hours as a bargaining chip to win better terms for laid-off staff, the second case of "bossnapping" in a month.
Sarkozy's government has sought to channel public resentment by talking tough on executive pay.
But the head of French employers' federation MEDEF, Laurence Parisot, while accepting that firms receiving state aid have special "obligations," has refused to take blanket action to curb bonuses or stock options.
AFP / Expatica