Sarkozy promises to outlaw 'golden parachutes'

12th April 2007, Comments 0 comments

PARIS, April 12, 2007 (AFP) - French presidential frontrunner Nicolas Sarkozy promised Thursday to outlaw golden parachute payouts to chief executives if elected, saying failure should not be rewarded.

PARIS, April 12, 2007 (AFP) - French presidential frontrunner Nicolas Sarkozy promised Thursday to outlaw golden parachute payouts to chief executives if elected, saying failure should not be rewarded.

"It seems to me that it is not normal to reward people who we cannot say have scored a brillant success," said Sarkozy, the rightwing candidate who is leading in polls for the April 22 first round of voting. A second round is set for May 6.

"What I don't accept is that you can have a big paycheck and a big parachute at the same time. If you succeed, you must be rewarded, if you fail, you must be penalized," Sarkozy said in an interview to Europe 1 radio.

Asked whether he would outlaw the practice, Sarkozy answered "yes".

His remarks added to the storm of controversy over the 8.5 million euro (11.5 million dollars) severance payment given to French aerospace executive Noel Forgeard of Airbus parent company EADS, who resigned in July.

Details of Forgeard's package were released this week after Airbus announced it would cut 10,000 jobs across Europe as part of a turnaround plan.

Sarkozy said "it would seem normal to me" if Forgeard decided to give back the severance pay to EADS.

The former interior minister defended the "strategic choice" of some companies to pay their executives huge salaries, saying that reflected the high-risk mandates that they undertake.

"A big salary pays for the high-risk," said Sarkozy. "But if you have a big parachute, there is no high risk."

Forgeard stood down as co-chief executive of EADS because of the Airbus troubles and controversy over his decision to exercise share options just months before news of the problems was announced.

He was awarded 6.1 million euros in pay -- more than two years' salary -- and was also entitled to a non-competition indemnity package payable over two years worth 2.4 million more, according to company documents released Tuesday.

Socialist contender Segolene Royal, who is trailing Sarkozy in the polls, called on Airbus Wednesday to withdraw its proposed 10,000 job cuts following revelations of the money paid to Forgeard.

Royal called the payments a "scandal" and a "provocation" as Airbus battles with major losses caused by delays to its new A380 super-jumbo jet.

"Taking this information into account, I call on Airbus leaders to withdraw the whole plan so we can start afresh to see which job cuts are justified by the industrial strategy," Royal said.

Centrist Francois Bayrou, who ranks third in the polls, also expressed outrage and said it was time to inject some "morality" into business affairs.

He proposed a law that would "ensure that such perks are decided by an assembly" and to give market regulators the authority to investigate such cases.

Far-right candidate Jean-Marie Le Pen described the payout as "high-life gangsterism" saying he was scandalized that "someone who led a business to failure is leaving with a jackpot."

He said businesses should take their interests at heart and scrap such practices.

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

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

And on Wednesday 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.


Copyright AFP

Subject: French news

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