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
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
News
i100
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
News
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

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project