Fat cat, moi? I have let down my shareholders, so I have decided to give back my £3m pay-off

Imagine a British business leader deciding to give up his multimillion-pound pay-off because he had let down the shareholders whose investments he had squandered and the employees whose jobs he had cut.

It is unthinkable. But that is exactly what happened in France yesterday when one of the country's top business leaders, Pierre Bilger, agreed to forgo the €4.1m (£2.87m) severance package he received from the troubled Alstom engineering group - best known over here for making London Underground's locomotives.

Alstom's performance under M. Bilger has been about as reliable as a Tube train. He was at the helm of GEC-Alstom (as it was then known) when it was floated in 1998 and orchestrated the ill-advised purchase of the energy business of the Swiss-Swedish company ABB, a deal that cost Alstom more than €5bn. With a collapsing share price and 5,000 job losses, the French government has been forced to step in with a €2.8bn rescue package.

But unlike his British counterparts, who have felt no qualms when walking away with millions of pounds after presiding over spectacular corporate collapses, M. Bilger clearly has a conscience.

M. Bilger, 63, who stepped down as chairman and chief executive of Alstom in March, said he was handing back €4.1m - €3.8m after tax and social charges - because he did not want to be a "cause for scandal among the 100,000 Alstom employees whom I had the honour to direct for 12 years, nor among shareholders who trusted me from 1998''.

He said he would keep €1m as his salary for 2002 and the three months' notice he served at the beginning of this year. M. Bilger said the €4.1m was not a golden parachute but a severance deal calculated to correspond to his 20 years' service since he joined the Compagnie Générale d'Eléctricité, later subsumed into the giant engineering group.

"Whatever anyone may say, I have always been very careful to respect the principles of corporate governance," he said. "I was the second ever chairman of a listed company to declare my assets, long before this became obligatory."

He said that from 1 January he would live off a state pension. "I have my principal residence in Paris, which I bought in 1978. I have the use of a country home, which is in the names of my five children. I have €300,000 in a savings account and I am keeping 170,000 Alstom shares because I have always invested my savings in the group. I think it can be said that, given that I ran a company of 100,000 people for 12 years, and compared to other business people in France and abroad, I am not in the same [wealth] league," he said.

Some analysts said they believed M. Bilger's move had been made after pressure from the French government. They suggested the announcement was the direct work of his successor, Patrick Kron, who with the French authorities is currently in the process of trying to convince the European Competition Commission to accept the state bail-out of Alstom. Under the controversial deal, released on 6 August, the French government will take a majority 31.5 per cent share in Alstom.

The issue of golden parachutes - though not as controversial in France as in Britain, partly because business leaders still hide behind an old cultural taboo about disclosing money matters - has begun to provoke anger in France.

The developments at Alstom coincided with a legal battle on two continents over an attempt by another French businessman, Jean-Marie Messier, to keep a €20.5m severance package he claims to have negotiated with Vivendi Universal.

After M. Messier announced that he would take Vivendi Universal to court in New York to challenge a decision by the company not to pay him the money he claims he is owed, Pierre Mehaignerie, head of the National Assembly's finance committee, called for an inquiry into fat cat pay-offs.

While M. Bilger's decision to tear up his severance cheque did not impress everybody in France, it was still a gesture of unparalleled generosity compared to the UK.

In Britain, despite the City seeing a ferocious backlash against payments for failure in the boardroom, there have been very few examples of executives opting to take less than their entitlement.

Shareholder groups seized on the Alstom gesture as evidence that so-called golden goodbyes for directors forced out for poor performance were on their way out.

One fund manager said: "We are talking to chairmen of FTSE 100 companies all the time now about this. They know that any board which is seen to sign off a massive payment for someone who is sacked will be mauled not only by the media but also by the investment community."

A small number of companies have already reined in the practice of making huge pay-offs. Rick Haythornthwaite, chief executive of the engineering group Invensys, won the praise of the corporate governance lobby in May when he decided to cut his notice period from a year to one month.

As a consequence he would be paid about £80,000 if he left the struggling company, compared with more than £900,000 under his old contract.

The move was intended to "dispel any potential noise about remuneration at a time when executive pay is a contentious issue", Mr Haythornthwaite said in May, when the change in his contract was disclosed.

Sir Roger Hurn, former chairman of the bombed-out cable company Marconi, also won a small amount of respect when news emerged that he "did not seek" compensation for leaving the company, which has had one of the most spectacular collapses in recent history. But never in Britain has a business leader been forced to heed public opinion in so dramatic a way as M. Bilger.

Tony Watson, chief executive of Hermes, the pension fund manager that has been one of the most vocal critics of lavish payments for mediocre performance in the boardroom, appealed to all members of the board to look to their conscience on the matter.

"It behoves people with responsibility, who earn a lot and are in charge of a lot of people, to think about their position. The chairman, the remuneration committee and the person should stand back and think 'is this fair?'," Mr Watson said.

He and many others in the City pressing for reform believe that rather than relying on executives' conscience, getting their contract right in the first place is the "holy grail" of corporate governance.

Michael McKersie, manager of investment affairs at the Association of British Insurers, whose members control a fifth of the total value of the London stock market, said: "There is no substitute for getting the contract right in the first place so that it will not lead to a payment for failure."

With an investigation into allegations of illegal payments still hanging over him as he leaves his post, whether M. Bilger's retirement will be as scandal-free as he would like remains to be seen.

EX-FAT CATS

BARCLAY KNAPP President and CEO of NTL

Total pay since 1996 (when CableTel bought NTL) to 2003: £4.3m
Pay-off: £1.4m
Row: Knapp will get three times his salary, despite presiding over the biggest restructuring of the decade, which led to huge losses.

ADAM SINGER CEO of Telewest

Total pay 2000 to 2002: £3.07m
Pay-off: £1.42m
Row: Despite taking the company to the verge of bankruptcy, Singer got twice his annual salary in compensation for stepping down last summer.

BOB MENDELSOHN CEO of Royal & SunAlliance

Total pay 1998 to 2002: £6.59m
Pay-off: £1.44m
Row: Mendelsohn, an American, was last year forced out after RSA almost ran out of money and then proved unable to find a buyer for its business. It has been forced to sell assets.

IAN HARLEY CEO of Abbey National

Total pay 1998 to 2002: £4.4m
Pay-off: £1.13m
Row: Harley collected a year's salary, plus bonus and pension benefits, despite losing money throughrisky lending. He also fought a merger with Lloyds TSB that would have netted £14 a share (against last night's close of £5.77).

Pay is salary plus bonuses and benefits; total includes pay-off. Dates are periods people held CEO slot, apart from NTL, where the CableTel merger is taken as the starting point.