Satan's Evil Twin Posted May 31, 2012 Share Posted May 31, 2012 France moves to cap executive pay at state firms PARIS | Wed May 30, 2012 7:49pm IST (Reuters) - France's new government will flesh out plans to cap the pay of top executives at state-controlled companies by mid-June, laying down a marker in a Europe-wide debate fuelled by waves of austerity and rising unemployment. Elected this month promising to curb the privileges enjoyed by France's wealthy and powerful, Socialist President Francois Hollande pledged during campaigning to limit senior executives' salaries to a maximum of 20 times that of their lowest-paid employee. "We are working on plans for pay at public companies to be cut," Finance Minister Pierre Moscovici told journalists on Wednesday after a cabinet meeting. These would be ready in two weeks, he said. High executive pay has become a hot topic on both sides of the Atlantic, with U.S. and European companies seeing a rise in AGM votes against remuneration packages [iD:nL5E8G8237][iD:nL5E8GM3M9]. While restricted to state-controlled firms, the French pay limit could affect a number of listed companies including nuclear power plant builder Areva (AREVA.PA) and utility EDF (EDF.PA) [iD:nL5E8G2F8V]. Both declined to comment on the plan. Government spokeswoman Najat Vallaud-Belkacem said it was normal for the heads of public companies to accept pay curbs after the presidential and ministerial salaries had been cut on Hollande taking power. "The measure will apply equally to contracts in place today. Waiting for contracts to end would equate to kicking the can down the road when the urgency of the crisis means we need to act fast," she said. TAX BURDEN That puts France one step ahead of Britain, where Conservative Prime Minister David Cameron has promised legislation this year to tackle high executive pay, and leant on bosses to give up bonuses at banks that were partly nationalized in bailouts after the 2008 financial crisis. He has offset the impact of any curbs by ditching the country's top 50 percent income tax band. Hollande, who has by contrast said he will introduce a higher tax band, sought to portray himself during campaigning as champion of the common worker, tapping into voter frustration with his predecessor Nicolas Sarkozy, widely seen as too close to France's corporate elite. With a wave of layoffs feared by unions now that the presidential election is out of the way, executive pay has become an increasingly sensitive subject, with some corporate high-flyers seen as enjoying generous severance packages. Moscovici said late on Tuesday that the government opposed a 400,000 euro ($500,000) indemnity payment for the former chief executive of Air France-KLM (AIRF.PA), Pierre-Henri Gourgeon. A representative of the French state, which holds 15.9 percent of the loss-making Franco-Dutch carrier, will not vote in favor of Gourgeon's payout at a shareholders meeting on Thursday, the minister said in a statement. ($1 = 0.7977 euros) (Reporting by Elizabeth Pineau and Nick Vinocur; Writing by Leigh Thomas; Editing by John Stonestreet) http://in.reuters.co...E84T0XK20120530 I applaud such a bold move and can't wait to see the effect it has in a developed European nation like France. I especially like tying top pay to the lowest in a company. Link to comment Share on other sites More sharing options...
goalie13 Posted May 31, 2012 Share Posted May 31, 2012 I applaud such a bold move and can't wait to see the effect it has in a developed European nation like France. I especially like tying top pay to the lowest in a company. Link to comment Share on other sites More sharing options...
Satan's Evil Twin Posted May 31, 2012 Author Share Posted May 31, 2012 It's an interesting concept. But when I think about it in terms of one of the most public people to get bashed over their salary (David Hahn) I am not sure it would make a difference. BC Ferries employees get paid fairly well. I am certain that it wouldn't be much of a stretch if the lowest paid full-time employee made at least $50K per year (but if someone out there works for Ferries and knows better, please correct me). $50K x 20 = $1M So is this the kind of measure that looks good on face value but doesn't stand up when the math is applied? What I would like to see capped are some of the ridiculous buy-outs and retirement packages we see. Link to comment Share on other sites More sharing options...
CanuckRow Posted May 31, 2012 Share Posted May 31, 2012 It's a nice step. I hope eventually Canada and/or the US will have a cap for CEO salary based on profit percentage. But all it is, is just a nice thought. Link to comment Share on other sites More sharing options...
Satan's Evil Twin Posted May 31, 2012 Author Share Posted May 31, 2012 It's a nice step. I hope eventually Canada and/or the US will have a cap for CEO salary based on profit percentage. But all it is, is just a nice thought. Link to comment Share on other sites More sharing options...
goalie13 Posted May 31, 2012 Share Posted May 31, 2012 It's a cap, not every exec will get paid 20x the lowest paid employee's salary. Link to comment Share on other sites More sharing options...
goalie13 Posted May 31, 2012 Share Posted May 31, 2012 It's a nice step. I hope eventually Canada and/or the US will have a cap for CEO salary based on profit percentage. But all it is, is just a nice thought. Link to comment Share on other sites More sharing options...
Satan's Evil Twin Posted May 31, 2012 Author Share Posted May 31, 2012 I realize it's a cap. I was just thinking that it might be too high at 20 times. I was just using Hahn as an example where a cap may not have prevented what he got paid. Link to comment Share on other sites More sharing options...
bolt Posted May 31, 2012 Share Posted May 31, 2012 The Conservatives would never agree to that. They are fed by corporate lobbysists who want to see the average workers salary cut while profits increase giving corporate management and board members lucrative bonus packages. Link to comment Share on other sites More sharing options...
LostViking Posted May 31, 2012 Share Posted May 31, 2012 I wonder, if this were applied to corporate executives, if it would promote a gutting of the middle tiered income positions. Might be that a couple extra provisions on top would help solidify the spirit of the rule change. In this case, being state-run companies, I think it's a good idea and am eager to keep an eye on how this ends up working out. Link to comment Share on other sites More sharing options...
Buddhas Hand Posted May 31, 2012 Share Posted May 31, 2012 Twenty years ago the salary difference between a US CEO and a factory worker was 40:1. A few years ago it was more than 400:1. J. Micklethwait and A Wooldridge, writers on globalisation 2000 and i am willing to bet that ratio has increased again in the last ten years . Link to comment Share on other sites More sharing options...
Fanuck Posted May 31, 2012 Share Posted May 31, 2012 This doen't impress me. It's just lip-service by a government who wants to buy some votes from the bourgeoisie. Empty promises like this mean nothing especially since everyone knows that while the executive salaries may have a cap - they will likely get around that cap in creative ways with exorbitant signing bonuses, fat expense accounts, stock options, disgustingly inflated pensions, and golden-parachute retirement/severence packages - all considered non-salary related income by the accountants and polititians when it suits them. Link to comment Share on other sites More sharing options...
D-Money Posted May 31, 2012 Share Posted May 31, 2012 Something tells me all menial services in State firms (cleaning, mailroom, basic clerical) will be outsourced. That will keep the lowest paid employee's salary higher. Link to comment Share on other sites More sharing options...
ronthecivil Posted May 31, 2012 Share Posted May 31, 2012 This doen't impress me. It's just lip-service by a government who wants to buy some votes from the bourgeoisie. Empty promises like this mean nothing especially since everyone knows that while the executive salaries may have a cap - they will likely get around that cap in creative ways with exorbitant signing bonuses, fat expense accounts, stock options, disgustingly inflated pensions, and golden-parachute retirement/severence packages - all considered non-salary related income by the accountants and polititians when it suits them. Link to comment Share on other sites More sharing options...
ronthecivil Posted May 31, 2012 Share Posted May 31, 2012 I wonder, if this were applied to corporate executives, if it would promote a gutting of the middle tiered income positions. Might be that a couple extra provisions on top would help solidify the spirit of the rule change. In this case, being state-run companies, I think it's a good idea and am eager to keep an eye on how this ends up working out. Link to comment Share on other sites More sharing options...
D-Money Posted May 31, 2012 Share Posted May 31, 2012 I realize it's a cap. I was just thinking that it might be too high at 20 times. I was just using Hahn as an example where a cap may not have prevented what he got paid. Link to comment Share on other sites More sharing options...
PlanB Posted May 31, 2012 Share Posted May 31, 2012 What will end up happening, is state firms will end up an "executive training ground" of sorts. They'll get in, establish themselves for 6-12 months, and then if they're worth their salt, they'll move on to private jobs that pay SIGNIFICANTLY more. Just like you would't stay at a job that pays you $15/hour, when people are lining up to give you $50/hour for the same thing. Link to comment Share on other sites More sharing options...
goalie13 Posted May 31, 2012 Share Posted May 31, 2012 Capping an executive's salary at a million may seem like plenty to the average Joe, but in reality, that's really low. A CEO is a peak performer in his field. Compare that with the peak performers in hockey - a million is less than twice the minimum wage of an NHL player. What will end up happening, is state firms will end up an "executive training ground" of sorts. They'll get in, establish themselves for 6-12 months, and then if they're worth their salt, they'll move on to private jobs that pay SIGNIFICANTLY more. Just like you would't stay at a job that pays you $15/hour, when people are lining up to give you $50/hour for the same thing. Link to comment Share on other sites More sharing options...
C.Jung Posted May 31, 2012 Share Posted May 31, 2012 I wonder, if this were applied to corporate executives, if it would promote a gutting of the middle tiered income positions. Might be that a couple extra provisions on top would help solidify the spirit of the rule change. In this case, being state-run companies, I think it's a good idea and am eager to keep an eye on how this ends up working out. Link to comment Share on other sites More sharing options...
D-Money Posted May 31, 2012 Share Posted May 31, 2012 You might be correct. But maybe, and I mean maybe, it will attract some people who actually care about the job and not just the paycheque at the end of the day? People who actually want to make a difference and believe that the salary being capped is a reasonable concept and that the wage is also reasonable for what they do and that they can still make a contribution to society without exploiting the people of their country for unjust wages so they can have the finer things in life. Oh, who am I kidding, no one will want that job if they cap the salary - GREED is the almighty overriding principle of our modern society right? Link to comment Share on other sites More sharing options...
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