PARIS (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.
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