French companies that have received government cash to help weather the economic downturn will be subject to stringent restrictions on bonuses and severance packages until 2010, under rules announced by Prime Minister Francois Fillon.
French Prime Minister Francois Fillon has unveiled stringent restrictions on stock options and other executive perks for companies that have been bailed out by the state.
Fillon, speaking at the Elysée Palace in Paris, announced that executives of hard-hit companies that have received public money to beat the downturn will have to “renounce their stock options and free share packages”.
“The attribution of executive pay in these companies must be made public,” Fillon said. “These are crisis rules and they will apply until at least the end of 2010.”
“They can be extended indefinitely and come into effect immediately,” he added.
The French premier said the new rules were “a question of justice”.
He said directors who had paid themselves huge bonuses while laying off staff and enjoying state aid had acted “in defiance of elementary morality”.
“Our economy cannot develop without dynamic and motivated entrepreneurs, and we have to promote free enterprise,” the French PM said. “But it is essential for rules and discipline to regulate top-level executive pay, and it is natural that in times of crisis these rules should be strengthened.”
Several French companies touched off a public outcry in France after they paid millions of euros in bonuses while accepting aid from taxpayers.
Public companies also in the dock
Investment bank Natixis, which received two billion euros (2.6 billion dollars) in government funds, was in the eye of the storm last week when it admitted to paying a total of 70 million euros in bonuses to some 3,000 employees.
Top executives at Société Générale bank agreed earlier this month to hand back thousands of stock options after French President Nicolas Sarkozy described the perks as "unacceptable" given the aid enjoyed by the bank.
The measures will also curb bonuses and severance packages at all public companies to show “that we can lead the way when it comes to regulating executive pay.”
The chairman and the vice president of French energy giant GDF Suez, 35.7% state-owned, decided to give up their stock options after workers went on strike in protest.
Date created : 2009-03-30