With jobless numbers climbing rapidly and huge demonstrations against the government's inept handling of the ongoing economic crisis, the French government issued a special decree Monday banning stock option grants and limiting bonuses for bankers and carmakers that have benefited from government bailouts, reports say.
Announcing the measures, Prime Minister François Fillon said France was the first European country to lay down such legal restrictions on executive pay. Although not retroactive, the special decree that comes into effect Tuesday without the need for the parliamentary debate--as in the case for standard legislation--would run through 2010, he said in a statement, adding that there is a possibility it could be extended.
The decree will ban stock options and stock grants to companies receiving state support besides regulating variable elements in executive packages by banning bonuses that are not linked to set targets. It will prevent targets from being linked to a company's share price and also prevent management bonuses being paid in groups where there have been huge staff layoffs and it would force boards to reveal their decisions on bonus payments.
There is no question of some persons escaping from the consequences of the crisis while others suffer unemployment or pay cuts, Fillon added, pledging to monitor compliance with the decree carefully because it is a question of justice.
He said France's six big banks -- Societe Generale (SOGN.PA), BNP Paribas (BNPP.PA), Credit Agricole (CAGR.PA), Banques Populaires, Caisses d'Epargne (CNAT.PA) and Credit Mutuel -- and its carmakers Renault (RENA.PA) et PSA (PEUP.PA) were singled out because they have received extensive aid since the financial crisis broke out in September, leading to economic turmoil across the globe.
President Nicolas Sarkozy allocated USD 14 billion in October to prevent France's six main banks from sinking and loaned USD 8 billion under favorable terms to the country's three main car companies.
For these companies, extra restrictions beyond those of common law rules are necessary, said Fillon, who led the outrage earlier this month after it emerged that Societe Generale executives had been awarded hundreds of thousands of stock options despite having recently received state funding.
Their managers will have to do without stock options and also accept that the variable and exceptional elements in their pay are strictly regulated, he added.
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