French government leads charge against fat-cat pay
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France’s new Socialist government has tried to block large payments to two top bosses as part of its campaign to reduce the gap between the pay of executives and rank-and-file workers. But, even though Air France shareholders voted against a 400,000-euro handout to its former chief, he looks set to pocket it, anyway.
State representatives at two shareholders’ meetings Thursday led the charge in voting against cash payouts to two departing bosses.
A February study by firm Proxinvest showed average salaries for executives
at firms listed on Paris's CAC 40 benchmark index rose 34 per cent in 2010 to an
average of 4.1 million euros.
Shareholders of aeronautic and defence company Safran, which is 30 per cent state owned, voted down a golden parachute worth over two million euros to chief executive Jean-Paul Herteman, which he himself had proposed.
And at Air France-KLM, which is expected to shed as many as 5,000 jobs in its efforts to clear millions of euros of losses, the meeting refused to endorse a 400,000-euro payout to former boss Pierre-Henri Gourgeon that came on top of a golden parachute worth more than one million euros.
But Gourgeon has already received the money and is not obliged to repay it, as current Air France chief Jean-Cyril Spinetta pointed out when he opened the meeting.
On Thursday morning Economy Minister Pierre Moscovici declared that Gourgeon was morally obliged to give back the money.
Gourgeon has not been available for comment.
The government will encourage restraint in all companies where it has a share, ministers said Thursday.
“Wherever the state is majority shareholder it will impose our policy … wherever it has a minority stake it will try to convince,” declared Industrial Recovery Minister Arnaud Montebourg.
And Moscovici send Thursday’s votes were a “strong signal of its desire for change on the incomes questions”.
The government, which cut the president's and ministers' salaries by 30 per cent as part of an austerity drive, has promised to introduce a cap on state company executive pay, limiting it to no more than 20 times that of the lowest-paid worker, by mid-June.
Prime Minister Jean-Marc Ayrault this week said that it would apply to existing contracts as well as those that are signed in the future.
Majority state-owned firms that would be affected include rail company SNCF, the post office, nuclear giant Areva and electricity company, EDF, whose CEO Henri Proglio is reported to earn 1.5 million euros a year, 80 times the lowest wage in the company according to unions.
EADS boss Louis Gallo on Thursday conceded that bosses could “get by” on salaries that are 20 times the minimum.
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