June 1, 2012 12:23:00 pm
France’s new Socialist government is moving to clamp down on executive pay at state-owned companies amid widespread public anger at salary packages seen as excessive in Europe’s crisis-hit economies.
President Francois Hollande’s government has vowed to announce measures by mid-June capping salaries for top executives at no more than 20 times the pay of a company’s lowest-paid worker.
The move follows other popular and symbolic steps by the Socialists,including a 30 per cent pay cut to the salaries of the president and ministers and promises of a 75 per cent tax rate on salaries over a million euros.
The government set the tone at an Air France-KLM shareholders meeting today by opposing a USD 4,96,000 indemnity paid to former CEO Pierre-Henri Gourgeon and urging him to return it.
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Gourgeon was appointed CEO of the airline,in which the state holds 15.8 per cent,in January 2009,but resigned in October amid rising losses. The 4,00,000 euro indemnity was part of a 1.4 million euro severance package.
Some 78.8 per cent of shareholders voted against the payment,but under the French labour code it cannot be rescinded,Air France-KLM executives said.
The government opposition was also instrumental in getting shareholders today to reject a golden parachute for Jean-Paul Herteman,the outgoing CEO of French aerospace group Safran,in which the state holds 30 per cent.
The Socialists had initially said the pay cap would apply only to new contracts but Prime Minister Jean-Marc Ayrault went further this week,saying the measure would also apply to existing contracts,slashing some top salaries by more than half.
“I believe in the patriotism of our executives,who can understand that the crisis requires the political and business elite to set an example,” Ayrault told the weekly L’Express.
Finance Minister Pierre Moscovici said this week it was crucial to “act now” so that the wage gap “is decent,especially when social and economic situations are difficult.”
Majority state-owned firms that would be affected include railway SNCF,post office La Poste,nuclear power plant builder Areva and in particular electricity giant EDF,whose CEO Henri Proglio earns a reported 1.5 million euros a year,which unions have said is 80 times the company’s lowest salary.
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