France to ban bonuses at state-aided firms

27th March 2009, Comments 1 comment

Days after a million workers took to the streets to contest his economic policies, French President Nicolas Sarkozy has announced plans that will temper executive bonuses.

Paris -- President Nicolas Sarkozy's office on Thursday announced plans to ban executive bonuses and stock options at some state-aided French firms, amid a public outcry over executive perks at failing companies.

The French government will pass a decree detailing the ban, Sarkozy's chief of staff Claude Gueant told AFP.

"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," Gueant told France 24 television.

"It is faster and easier to do it this way, rather than through the legislative route," Gueant added, speaking to AFP.

Sarkozy this week threatened a law to cap bonuses and stock options at companies that lay off staff or receive bailouts from taxpayers' money, days after a million workers took to the streets to contest his economic policies.

The government this week vowed to oppose a "golden parachute" for the departing boss of troubled auto supplier Valeo, Thierry Morin, who received a multi-million-euro payoff despite letting the firm sink into the red.

But the toxic issue reared its head again Thursday as workers at a GDF-Suez gas terminal went on strike in protest at stock options given to bosses at the group, in which the French state is number one shareholder.

At the GDF-Suez terminal in Fos-sur-Mer near Marseille, workers walked off the job Wednesday after the firm confirmed it had given stock options worth at least 10 million euros (14 million dollars) to chief executive Gerard Mestrallet and vice president Jean-Francois Cirelli.

"This was the last straw," said union representative Robert Rozy. "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."

Buoyed by high oil prices, the French energy giant reported a 13 percent rise in 2008 net profit to 6.5 billion euros, and said operating results would rise again this year despite the economic crisis.

GDF-Suez has not announced layoffs but the strikers are pressing for wage increases they feel the company can afford given its multi-billion profits.

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 mounting anger among workers could spill over into social unrest.

Sacked French workers Thursday released the manager of a factory run by US firm 3M held 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 anger by talking tough on executive pay.

But the head of French employers' federation MEDEF, Laurence Parisot, while accepting that that firms receiving state aid have special "obligations", has refused to take blanket action to curb bonuses or stock option.

Nadege Puljak/AFP/Expatica

1 Comment To This Article

  • Jennifer posted:

    on 28th March 2009, 12:58:53 - Reply

    The idea to limit or massively tax any bonus payout for any individual or any private sector business whether or not they were state-aided could set a dangerous precedent for everyone. If government can begin by targeting one group of people, the law could eventually apply to every private citizen as well. The French people should direct their anger toward government for the financial situation, and not the executives or any other select group of people.