France to unveil ban on executive payoffs

March 30, 2009
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, PARIS, March 30 – France was on Monday set to unveil a ban on stock options and other executive perks at bailed-out companies after a string of payoffs sparked public outrage.

Several banks and a car parts supplier touched off a furore in France after revealing they had paid millions of euros in bonuses and other benefits to employees while accepting aid from taxpayer money.

President Nicolas Sarkozy last week said it was unacceptable for companies to hand out bonuses, stock options and golden parachutes while laying off workers and accepting state aid to help them weather the economic crisis.

Prime Minister Francois Fillon was to present a decree barring companies that receive bail-outs from receiving the special perks at a Paris news conference scheduled for 1345 GMT.

Les Echos financial daily said the measure would apply to bank and car industry executives from firms that receive state aid and would bar them from receiving stock options and other benefits until the end of 2010.

The Socialist opposition is pressing for a five-year ban on stock options and other benefits on all companies, except for startups.

Sarkozy\’s chief of staff Claude Gueant on Thursday announced that a decree would be issued this week, highlighting the government\’s desire to move quickly to quell public anger over the big bonuses.

The decree "will state very clearly that the executives of firms that have received state aid must give up stock uptions, bonuses and golden parachutes," said Eric Besson, the immigration minister and a senior official with the governing UMP party.

Investment bank Natixis, which received two billion euros (2.6 billion dollars) in government funds, was in the eye of the storm on Friday when it admitted to paying 70 million euros in bonuses to some 3,000 employees.

Natixis, a subsidiary of Caisse d\’Epargne and Banque Populaire, currently being merged, last month reported a net loss of 2.8 billion euros for 2008 and is laying off 1,250 workers in France and in branches abroad.

Top executives at Societe Generale bank agreed earlier this month to hand back thousands of stock options after Sarkozy described the perks as "unacceptable" given the aid enjoyed by the bank.

The chairman and the vice president of French energy giant GDF Suez, 35.7-percent state-owned, decided to give up their stock options 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.

As the economic crisis bites, sending unemployment soaring to nearly 2.4 million jobless by the end of February, the government fears that anger in the workforce could spill over into social unrest.

French unions have organised two days of nationwide strikes in two months that saw more than one million people take to the streets to protest Sarkozy\’s handling of the economic crisis.

Sarkozy\’s government has sought to channel public resentment by talking tough on executive pay.

The government last 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.

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