1 July, 2012
Shareholders at two French companies recently voted against additional bonus payouts for executives, apparently reflecting a new European trend, or “shareholder spring,” born of the economic turmoil gripping the region.
At aerospace company Safran, where Chairman and Chief Executive Jean-Paul Herteman was paid 1.43 million euros last year, shareholders rejected a proposal to award him two years of pay and an additional pension when he retires, according to Reuters.
Similarly, Air France-KLM shareholders voted against a 400,000-euro bonus that was paid to its former CEO, Pierre-Henri Gourgeon, in addition to the 1.125-million euro golden parachute he received, according to reports by Reuters and Radio France Internationale.
French Finance Minister Pierre Moscovici hailed the decisions and suggested that Gourgeon be obliged to return the 400,000 euros.
The French government is a shareholder in Safran and Air France-KLM, which recently cut more than 5,000 jobs to offset losses in the millions of euros. French President Francois Hollande has promised to limit the difference between public sector executives’ and workers’ pay to 20 to 1, and is expected to act on that promise soon.
"The government is thus again giving a strong signal of its will for change on the question of remuneration," Moscovici said in a statement following the Safran vote.
If these decisions and the Hollande administration’s position are any indication, European global executive positions may see their compensation reduced as the euro zone continues to struggle with austerity measures prompted by the collapse of Greece and Spain.
In contrast, compensation for American company ExxonMobil executives is set to increase.
The San Francisco Chronicle reported that investors at the company's annual meeting cast roughly 78% of their shares in favor of a new compensation-setting system delivering higher pay, despite assertions by critics saying that executive pay is already too high.
Shareholder advisory firms criticised the new system for excessive pay and for failing to link pay increases to the company’s financial performance, but differed in their recommendations on whether to vote for it.