France looks at ways to curb 'fat cat' salaries across the EU

Pressure is building in the European Union for common rules to discourage, or punish, excessive payments to top business executives.

France, which takes over the presidency of the EU on 1 July, will ask finance ministers to consider a European directive to curb disproportionate bonuses or golden handshakes to company bosses. The Dutch government has already introduced a draft national law to punish what it describes as "unjustifiable" payments to business leaders. The French finance minister, Christine Lagarde, said companies must put their own house in order or face a rash of national, or EU, legislation to clamp down on "excesses".

French officials said Paris felt that, without such an EU-wide curb, large companies or highly paid executives would evade national curbs by exercising their right to move from one EU country to another.

Jean-Claude Juncker, Luxembourg's Prime Minister, and president of the "Eurogroup" – the countries using the Euro – recently described steep increases in executive pay as a "social scourge". He said EU governments should consider ways of punishing disproportionate bonuses and high severance payments with windfall taxes.

The economic problems generated by the global credit squeeze and high oil prices have made executive pay a hot issue in all European countries. Even some right-of-centre governments – such as those in France, Luxembourg and Germany – complain that self-indulgent business leaders are making it difficult to argue for low annual pay deals for lower-level employees.

The French business magazine, L'Expansion, reported on Wednesday that payments to the chief executives of France's top companies, including salaries, share options and dividends, increased by 58 per cent last year to £128m.

A French law forcing companies to be more transparent about executive pay has had a perverse effect. Instead of discouraging big payments, it has encouraged French bosses to demand parity with their highest-paid colleagues and rivals. Mme Lagarde, herself a former top business executive in Chicago, said such high payments to the bosses of failing French companies was "perfectly scandalous", adding: "There is absolutely no problem when people succeed; let them earn lots of money."

Businesses, and employer's federations, must take action soon to curb unwarranted payouts or "there will be popular pressure for laws, or European directives to intervene", she went on. "A principle of fairness is at stake." How could governments urge low pay rises at a time of falling living standards if executives were awarding themselves 58 per cent increases in their remuneration packages?

President Nicolas Sarkozy has already spoken out against large "golden parachutes" to failed business leaders. Although often presented in Britain and the US as a kind of French Mrs Thatcher, he has called for the "moralisation of capitalism", something closer to the late President Charles de Gaulle's statist and social approach to business.

The Dutch finance minister, Wouter Bos, has proposed a draft law that would impose a 30 per cent tax on companies giving high bonuses or severance payments to top employees. The proposed "fat cat tax" has provoked anguished protests from large Dutch companies, who say that it will ruin their ability to compete on the European, and international, market. Some companies, including Royal Dutch Shell, have warned that they might move their headquarters to another country.

Mr Bos, the leader of the Dutch labour party, is unrepentant. "It's something everyone in Europe is concerned about, especially now the economic downturn is starting to bite," he said. "You can't expect employees to tighten their belts while those at the top are being paid ever-bigger bonuses, which are often not even linked to their performance. Public support for entrepreneurs will plummet if this continues."

Start your day with The Independent, sign up for daily news emails
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
i100
News
Caplan says of Jacobs: 'She is a very collaborative director, and gives actors a lot of freedom. She makes things happen.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015