France looking to ban bonuses at bailout banks
26 Mar 2009
With the bonus issue making headlines in US, things have also heated up across the Atlantic in France. The French government is to issue a decree banning bonuses and share options for executives of banks that have received government aid.
Claude Gueant, President Nicolas Sarkozy's chief of staff, said in a television interview that the government plans to issue a decree next week "fixing the conditions under which stock options and bonuses are forbidden in companies which have benefited from state aid." The French decree, which doesn't require parliamentary approval, would be effective immediately, Gueant said.
The measures are a response to rising discontent at executives cashing in bonus checks even as their companies are rescued with billions of euros in public funds. Under pressure from the government, four top executives at French bank Societe Generale, which took government bailout funds, gave up tens of thousands of stock options this week.
The French government is also opposing the € 3.2 million ($4.3 million) exit bonus paid to Thierry Morin, the former head of auto parts maker Valeo SA. French Budget Minister Eric Woerth called the parting pay package for Morin, who left Valeo on Monday, "provocative" and "abnormal.'' The company lost $250 million and laid off 1,600 workers in 2008. In addition, the company accepted $25 million in emergency aid from the French government to help it survive the economic downturn.
In the US, there has been outrage that insurer AIG paid out $160million in bonuses after taking $170 billion dollars in aid from the government. President Barack Obama expressed his anger and lawmakers voted to claw back 90 per cent of the bonuses through tax. (See: Reps pass 90-per cent AIG bonus tax bill, Senators relent)
