.France to cap top pay in state groups
France’s new socialist government has launched a crackdown on excessive corporate pay by promising to slash the wages of chief executives at companies in which it owns a controlling stake, including EDF, the nuclear power group.
In a departure from the more boardroom-friendly approach of the previous right-of-centre administration, newly elected president François Hollande wants to cap the salary of company leaders at 20 times that of their lowest-paid worker.
According to Jean-Marc Ayrault, prime minister, the measure would be imposed on chief executives at groups such as EDF’s Henri Proglio and Luc Oursel at Areva, the nuclear engineering group. Their pay would fall about 70 per cent and 50 per cent respectively should the plan be cleared by lawyers and implemented in full.
Mr Proglio earned €1.6m last year – 65 times more than his lowest-paid worker.
The government also wants to pressure other companies in which it owns a stake to follow its lead, even though it has no legal power to force such a change.
France is unusual in that it still owns large stakes in many of its biggest global companies, ranging from GDF Suez, the gas utility; to Renault, the carmaker; and EADS, parent group of passenger jet maker Airbus.
Mr Ayrault said he “believed in the patriotism” of company leaders and their willingness to share the country’s economic pain. Mr Hollande and his ministers are taking a 30 per cent pay cut.
Demonstrating the government’s eagerness to flex its muscles over boardroom rewards, Pierre Moscovici, the finance minister, said the state also plans to vote against a €400,000 payoff to the sacked chief executive of Air France-KLM at the company’s annual meeting in Paris on Thursday. France owns 15.8 per cent of the struggling Franco-Dutch airline.
Mr Moscovici said the payment to Pierre-Henri Gourgeon did not live up to the standards of “salary moderation and decency” that Mr Hollande wants to impose. Air France is going through a painful restructuring that will entail thousands of job losses.
Louis Gallois, the departing EADS chief executive and socialist supporter, warned that the pay cuts were going to be “steep” for some bosses and that such “crisis measures” must only be temporary, including Mr Hollande’s plan for a 75 per cent tax on yearly wages above €1m.
“We need to be more flexible than that,” he said, adding that it was “best left to companies to fix salaries”.
Pierre-Yves Gauthier of AlphaValue, a Paris-based corporate research group, said the measures “could almost have been put in place to create pressure on Mr Proglio”, whom some socialists would like removed because of his ties to Nicolas Sarkozy, the former president.
FT
I wonder if that includes Airbus too?
In a departure from the more boardroom-friendly approach of the previous right-of-centre administration, newly elected president François Hollande wants to cap the salary of company leaders at 20 times that of their lowest-paid worker.
According to Jean-Marc Ayrault, prime minister, the measure would be imposed on chief executives at groups such as EDF’s Henri Proglio and Luc Oursel at Areva, the nuclear engineering group. Their pay would fall about 70 per cent and 50 per cent respectively should the plan be cleared by lawyers and implemented in full.
Mr Proglio earned €1.6m last year – 65 times more than his lowest-paid worker.
The government also wants to pressure other companies in which it owns a stake to follow its lead, even though it has no legal power to force such a change.
France is unusual in that it still owns large stakes in many of its biggest global companies, ranging from GDF Suez, the gas utility; to Renault, the carmaker; and EADS, parent group of passenger jet maker Airbus.
Mr Ayrault said he “believed in the patriotism” of company leaders and their willingness to share the country’s economic pain. Mr Hollande and his ministers are taking a 30 per cent pay cut.
Demonstrating the government’s eagerness to flex its muscles over boardroom rewards, Pierre Moscovici, the finance minister, said the state also plans to vote against a €400,000 payoff to the sacked chief executive of Air France-KLM at the company’s annual meeting in Paris on Thursday. France owns 15.8 per cent of the struggling Franco-Dutch airline.
Mr Moscovici said the payment to Pierre-Henri Gourgeon did not live up to the standards of “salary moderation and decency” that Mr Hollande wants to impose. Air France is going through a painful restructuring that will entail thousands of job losses.
Louis Gallois, the departing EADS chief executive and socialist supporter, warned that the pay cuts were going to be “steep” for some bosses and that such “crisis measures” must only be temporary, including Mr Hollande’s plan for a 75 per cent tax on yearly wages above €1m.
“We need to be more flexible than that,” he said, adding that it was “best left to companies to fix salaries”.
Pierre-Yves Gauthier of AlphaValue, a Paris-based corporate research group, said the measures “could almost have been put in place to create pressure on Mr Proglio”, whom some socialists would like removed because of his ties to Nicolas Sarkozy, the former president.
FT
I wonder if that includes Airbus too?
posted by madtom at 11:31 PM
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