Paris : French President Nicolas Sarkozy has said that there should be no more severance payments or bonuses to executives of French firms who have performed badly.
“There must be no more ‘golden handshakes’. There must be no more bonuses or rewarding of free shares or stock options in a company that receives state aid, that undertakes massive job cuts or resorts to putting large numbers of its employees on short-time work,” Sarkozy said in an address Tuesday in the northern city of Saint Quentin.
“It is not responsible, it is not honest, to take a large bonus in case of failure,” Sarkozy said. “An executive who takes compensation for the difficulties he has created is not responsible, is not honest. You cannot have an economy without morality.”
Sarkozy’s reaction came after media reports that the outgoing head of the auto equipment supplier Valeo was to receive a severance payment of more than 3.2 million euros ($4.34 million), equivalent to about two years of his salary.
On Monday, Valeo announced that Morin would be stepping down because of what the company called “strategic differences”.
Morin leaves behind a company in difficulties. Because of the slumping global car market, Valeo lost 207 million euros in 2008, after a 27 percent plunge in turnover in the fourth quarter.
In December, the company announced that it would be cutting some 5,000 jobs worldwide, about one-third of them in France.
Valeo’s negative results and pessimistic outlook for 2009 moved the French government to invest 19 million euros in the company with money from the Strategic Investment Fund Sarkozy established to help enterprises survive the economic crisis.
Both government spokesman Luc Chatel and the head of the powerful employers association MEDEF, Laurence Parisot, demanded on Tuesday that Morin not accept the severance payment. But Morin insisted that the terms of his contract “be strictly applied”.
The controversy over Morin’s “golden handshake” came just days after government pressure forced management of the bank Societe Generale to renounce awarding 320,000 stock options to four senior executives.