In a major televised speech on Tuesday, French President Nicolas Sarkozy blasted bonuses and stock options offered to executives of companies that were laying off workers or receiving government bailouts.
“If no significant progress is made on the sharing of value or the division of profits by June, I will take my responsibilities,” said Sarkozy during a major economic policy speech in the northern French town of Saint-Quentin. “I call on management and workers to take control of this issue.”
Sarkozy’s speech came hours after the announcement that the departing boss of the troubled auto parts supplier Valeo was to get a 3.2-million-euro severance payment, or “golden parachute”.
The news of Valeo's chairman and chief executive Thierry Morin’s severance payment sparked public outrage, notably since the firm announced 1,600 lay-offs in France and 5,000 worldwide.
Following the failure of the French employers union, Medef, to introduce a general code of conduct to regulate executive pay, Sarkozy threatened to act.
The French president gave employers and workers unions until June to come up with a plan, failing which, he said, he would legislate on the issue by the autumn.
‘No more golden parachutes’
Sarkozy’s speech followed the weekend’s announcement that executives of French bank Societe Generale had agreed to hand back thousands of stock options following a public outcry.
French banks received $14.3 billion in state crisis aid in 2008, with Societe Generale taking $2.3 billion.
"There should be no more golden parachutes, there should be no more bonuses, distribution of free shares or stock options in a firm that receives state aid or which is about to lay off people," he said. The president did not however address the issue of legislating on employers’ salaries as envisaged by his party, the UMP.
Days ahead of the G20 summit in London, Sarkozy pleaded for stricter regulations of the financial system. “The London summit should not be a technical summit but a political summit where we can discuss the question of the reform of the capitalist system,” said Sarkozy.