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Economy

ORIGINAL FRENCH ARTICLE: http://www.humanite.fr/social-eco/a...

by Cécile Rousseau

CAC 40 salaries reach new heights

Translated Thursday 21 June 2012, by Pauline Harrowell and reviewed by Henry Crapo

While managerial pay in public sector companies is expected to be capped, some top bosses in the CAC 40 might also wish to set a good example…

The CAC 40 big bosses can sleep easy in their beds. The scaling down of managerial salaries in public sector companies has for the most part passed them by. On the other hand, they should be worried about François Hollande’s proposed 75% tax band for salaries over 1 million euros p.a. This measure will not appear in this July’s budget however, leaving them plenty of time to react.

2011 has been a profitable year for the leaders of France’s biggest companies. The CAC 40 bosses shared 96.8 million euros between them, a haul of 2.42 million each. Bernard Arnault, at the head of LVMH, is the top earner. His package was 4.428 million euros – a leap of 22.5% in his variable pay component. Just behind him come Franck Riboud, CEO of Danone, and Jean-Paul Agon.

In 2012 Maurice Lévy of Publicis awarded himself a golden hello. He pocketed 16.2 million in deferred compensation, which had been accumulated since 2003, in return for his services. This did not prevent him from paying himself 3.6 million in 2011. Ironic for a chairman of the French Association of Private Companies, who is also author of a code of conduct on managerial salaries!

The Socialist Party’s measures are a step in the right direction, but they do not go far enough. Michel Fontaine, member of the CGT’s finance federation, said “It’s morally right to tax salaries, but maybe we need to develop a fairer tax system. We need to completely reform the tax collection system and bring in progressive taxation which could become confiscatory at a given point.”

While bosses’ salaries continue ever upward, the trade unionist points out that the tax brackets have been reduced under successive right-wing governments – although the trend started under François Mitterrand’s presidency. “If the State takes a part of their remuneration, there will be no need to legislate on salaries. But we must ensure capital revenues are taxed,” he adds. Top bosses can always bend the rules by taking their pay in shares, or by sheltering under foreign tax systems.

Some bosses are setting a good example. Stéphane Richard, CEO of France Télécom, a CAC 40 company with a state holding of 26%, announced that he would participate in the “1 – 20” salary scale. He gives the following warning, however: “When we’re dealing with top managers’ salary policy, we absolutely must have the ability to attract talent. We shouldn’t damage successful companies by imposing a hard and fast rule.” Stéphane Richard still managed to maintain dividends at 1.40 euro per share over 2011, while France Telecom’s net results showed a 20% drop, forcing the company to delve into its own pockets…..


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