Hollande To Impose Salary Cap For Executives At State-Owned Firms
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Newly elected French President Francois Hollande has set about in fulfilling his prior campaign promises by unveiling drastic new salary plans for state-owned companies, in which top executives will have their salaries capped to just twenty times that of the firm’s lowest-paid worker.
Newly elected French President Francois Hollande has set about in fulfilling his prior campaign promises by unveiling drastic new salary plans for state-owned companies, in which top executives will have their salaries capped to just twenty times that of the firm’s lowest-paid worker.
According to a report by The Guardian, the French state presently owns stakes in 52 companies; with 23 of the firms completely state-owned, including the railway SNCF and the post office La Poste.
The government also has minority stakes in Air France and Renault, while being the majority shareholder of companies such as energy giant EDG and nuclear power plant builder Areva.
But only companies where the state has more than 50 percent control will be affected by the salary cap. Still the government hopes that the other firms’ leaders will follow in the state’s lead.
[quote]”I believe in the patriotism of company leaders. They can understand the crisis requires the political and financial elite to set an example,” said French Prime Minister Jean-Marc Ayrault.[/quote]Most of the affected executives will see their salaries drop between 50-70 percent, and will follow in the footsteps of the President and his cabinet – who took a 30 percent pay cut themselves.
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The socialist government dismissed criticism that the pay caps would make it harder to recruit from the private sector, and insisted that the measure was critical to demonstrate “patriotism” and “morality”.
“For me, it’s a crisis measure, like the 75 percent tax on remuneration over one million euro,” said the outgoing chief executive of the European defence group EADS – which the French government has a minority in – Louis Gallois.
[quote]“These are measures that should be provisional, an expression of a crisis situation and necessarily solidarity.”[/quote]Francois Hollande unseated incumbent Nicolas Sarkozy as the French President after unveiling a wave of election vows – including clamping down on executives’ pay and introducing a 75 percent tax rate for the wealthy.
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On Wednesday, the government also announced that it would oppose a 400,000 euro indemnity payout to Air France’s former CEO, in which the state has a 15.9 percent stake in.
“It’s called decency in pay,” declared Arnaud Montebourg, France’s Minister for Industrial Recovery.
