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Euro countries want to stamp out golden handshakes

Eurozone finance ministers are taking a stand against "scandalous" excesses in executive pay and golden handshakes and "want the EU to serve as an example to and bring others on board."

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Eurozone finance ministers are considering ways of discouraging "scandalous" excesses in executive pay, including by closing loopholes for golden handshakes, Eurogroup chairman Jean-Claude Juncker said Tuesday.

"We believe that the excesses of captains of industries' (pay packages) that we have seen in several countries ... are really quite scandalous and we are continuing to examine what can be done," Juncker told journalists in Brussels.

Ministers from the 15 countries using the euro were in particular considering shaking up tax rules so that golden handshakes could no longer be tax deductible, he said.

Golden handshakes, large payments to senior executives when they leave a company, have stirred controversy recently after some corporate heavyweights received such payouts despite leaving their companies in disgrace.

The Netherlands has led the way on clamping down on golden handshakes, adopting rules recently taxing such pay-outs at a rate of 30 percent for people with annual salaries over 500,000 euros on condition the bonus is greater than the salary.

Juncker said such arrangements for corporate fat cats made it all the more difficult to justify calls on average workers to exercise wage moderation, especially at a time when they are struggling to cope with soaring inflation.

"People won't understand if we urge them to be moderate in their wage demands ... if we don't also say that it is not acceptable that certain top managers have excessive salaries and also benefit from golden parachutes which don't have any relation to their direct performance," he said.

However, Juncker acknowledged that for a clamp-down to be effective it would have to go beyond the eurozone and include not only countries in the 27 European Union but other countries as well.

"We want the EU to serve as an example to and bring others on board," he said.
 

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