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France to cap executive pay at â‚¬450000 for state firms

14 June 2012 09:20 (UTC +04:00)

Baku â€“ APA-Economics. France’s finance minister announced plans to limit executive pay at state owned companies to â‚¬450,000 a year, RTE reported.

He called the measure a matter of justice and morality.

The pay cap delivers on a campaign-trail promise by France’s new Socialist President Francois Hollande, who sought to tap widespread public anger over executive salary packages.

It will take effect in 2012 or 2013 depending on the company, Finance Minister Pierre Moscovici said.

"Earning â‚¬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," Moscovici told a press conference after a cabinet meeting where he presented plans for the cap.

The minister said 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.

He said the government planned to release a decree on the new limit by the end of July, and would 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 cap 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, the cabinet said in a statement.

The measure is meant to hold executive pay to a maximum of "20 times the average of the lowest salaries at the main state companies", the statement said, but did not give details on which workers’ salaries would be used for comparison.

The finance ministry said less than 20 executives currently have salaries over the limit.