France to limit executive bonuses

Move comes after employers' federation refuses to accept voluntary accord.

     Lagarde had warned the government would use legal means if no voluntary code was reached [Reuters]

    He said: "Medef does not want to react... Since there is neither the desire nor the means, we will give them the means and we will draw up a law.

    "I think we can define the main points very quickly."

    Public protest

    Last week, between 1.2 million and three million people took to the streets of France, demanding more help for workers and asking the government to curb executive rewards.

    On Sunday, the French bank Societe Generale announced to its employees that it had cancelled lucrative stock options for its four senior executives following public outcry.

    French banks received $14.3bn in state crisis aid in 2008, with Societe Generale taking $2.3bn.

    Medef has said it cannot impose curbs on employers, but is asking members to act responsibly.

    Societe Generale had faced a public outcry over bonuses for executives [AFP]
    Laurence Parisot, the association's president, will appear before parliament's legal committee in a hearing on Wednesday as politicians debate executive pay.

    Proposals have ranged from raising taxes on stock options to placing a cap on executive salaries and temporarily banning bonuses and options.

    However, some business leaders say they risk being made scapegoats for the downturn.

    Henri de Castries, chief executive of French insurer Axa, said: "It would be a bit naive to believe that we can resolve the crisis by focusing only on the issue of compensation."

    Christine Lagarde, France's economy minister, had said on Sunday that the government would use legal means if a voluntary agreement with employers could not be reached.

    SOURCE: Agencies


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