Pierre Moscovici said the pay squeeze will come into effect over the next two years and delivers on a campaign promise by France’s new socialist president François Hollande
France’s finance minister has declared a crusade against executive pay at state-controlled companies, describing a wages cap of €450,000 a year (£362,000) for bosses as a matter of “justice and morality”.
Pierre Moscovici said the pay squeeze will come into effect over the next two years and delivers on a campaign promise by France’s new socialist president François Hollande, who sought to tap widespread public anger over executive salary packages
“Earning €450,000 a year doesn’t seem to me a deterrent if we want to have quality men and women at the head of our companies,” said Moscovici. He added that the measure was needed to “make state companies more ethical” and respond to “the demands of justice and transparency” at a time of economic crisis.
The new government expects to publish a decree on the pay cap next month. Turning the screw on executives, it will then introduce a bill in parliament later in the year to address stock options, so-called “golden parachute” clauses and other components of executive salary packages.
The limit will apply to all companies in which the state holds majority ownership, including the postal service, nuclear power giant Areva, electric utility EDF, railway company SNCF and public transport operator RATP. Hollande set clear limits on executive pay on the campaign trail, saying that no executive at a state company should earn than 20 times the lowest-paid worker’s salary. Fewer than 20 executives currently have salaries over the limit, the finance ministry said.
“I’m convinced that the strict salary framework at public companies will in time inspire the stabilisation of certain practices in the private sector,” Moscovici said, promising that all salaries for top executives at state firms would now be made public.
The UMP, the party of former president Nicolas Sarkozy – who lost to Hollande in last month’s presidential run-off election – dismissed the cap as political posturing. “It’s a campaign promise. They’re pretending to fix our problems by reducing executives’ salaries. It falls under the category of ‘ostentatious morality’,” said UMP leader Jean-Francois Cope. “They make the French people believe they are fixing the problems with the budget and the economy by reducing the salaries of our country’s executives. It’s extremely hypocritical. This doesn’t fix anything.”