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France

Air France ex-CEO urged to return severance bonus

©

Text by News Wires

Latest update : 2012-05-31

The French government on Thursday urged the former CEO of Air France-KLM, Pierre-Henri Gourgeon (pictured) to return the €400,000 bonus he received in his severance package from the aviation group, of which the state is a minority shareholder.

AP - France’s finance minister personally asked the former head of Air France-KLM to return a €400,000 ($497,520) payout on Thursday, as the country’s new Socialist government tries to rein in executive pay.

Pierre Moscovici said on France Inter radio that the money, paid as compensation for a non-compete clause in the executive’s contract, “doesn’t go in the direction of decency.”

The French government, which holds a 15.9 percent stake in the Franco-Dutch carrier, said it would vote against the payment at a shareholder’s meeting Thursday, and the measure was in fact rejected, with 79 percent of shareholders voting against.

But Jean-Cyril Spinetta, CEO of the Air France-KLM holding company, explained that while the payment had to be submitted to a vote of the shareholders, the vote is merely procedural and carries no real weight. Even their rejection of it would “have no direct consequences,” he said.

Many of the questions at Thursday’s tense shareholders meeting were about the payment - which was often ridiculed, usually to cheers and applause from the audience. At one point, Spinetta shouted down a shareholder who began insulting the members of the board. That, too, elicited applause - a rare moment when the executives seemed to arouse the shareholders’ sympathy.

The government has said the payment, which has already been made to ex-CEO Pierre-Henri Gourgeon, who resigned in October, was particularly egregious since the carrier has posted losses and may soon resort to layoffs.

Air France CEO Alexandre de Juniac told shareholders Thursday that every effort was being made to limit layoffs. He added that the company’s management was discussing the generous retirement packages that have irritated shareholders and French citizens.

Putting a spotlight on the payment - even if the no-vote is only symbolic - is all part of President Francois Hollande’s charge to reduce what he calls exorbitant executive salaries.

Moscovici said Thursday that he will soon unveil a plan to force companies in which the state is the majority shareholder to ensure that their highest salary is not more than 20 times the lowest. He said CEO of French utility EDF, Henri Proglio, has already said he will implement the rule.

Proglio doesn’t have much of a choice: The state owns 84 percent of EDF’s shares. For other companies, in which the state is a minority shareholder, officials have said state representatives will use their powers of persuasion.

The French government is a majority shareholder in a handful of companies.

Large retirement packages came under scrutiny at another shareholder’s meeting Thursday: Shareholders in Safran, an aeronautic and defense equipment company, voted against a package and so-called golden parachute for the company’s CEO.
 

Date created : 2012-05-31

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