Decree ‘to limit directors' pay'
Banks and car makers receiving state help are expected to have their bonuses and stock-options limited by the government
BOSSES of companies receiving state aid in the economic crisis are expected to have limits imposed by decree on the bonuses they can claim.
A decree is a ruling by the prime minister or president without debate in parliament as is required for a fully-fledged law. Questions have been asked as to whether this matter is suitable for a decree – if not it may have to be voted on, possibly as an amendment to the Finance Law.
The proposal, which has been accepted by employers' organisation head Laurence Parisot, bans directors from taking stock options or free shares until the end of 2010. It would also ban bonuses that have no link to the success of the business and limit the use of variable remuneration – it should only go up in connection with precise performance criteria.
The decree would in practice only apply to banks which have been helped by the new Société de Prises de Participation de l'Etat (SPPE) – a body set up to provide state-guaranteed loans – or car manufacturers that have received loans direct from the government.
Firms that have benefited from a boost to their capital from the Fonds Stratégique d'Investissement (Strategic Investment Fund) would not be concerned nor would firms making great use of le chômage partiel (temporary lay-offs), however these would be expected to follow a code of practice drawn up by employers’ bodies Medef and Afep.
Medef head Ms Parisot has said it is legitimate for the state to set rules in cases where it is offering direct help to businesses. “Fundamentally, there is no difference between the objectives of the president and our own,” she said.
Photo: Medef
