Recently inaugurated Socialist President Francois Hollande has been executive pay should not exceed 20 times the salary of the lowest-ranking employees for companies owned or partially owned by the government according to new rules.
Now “France’s finance minister has declared a crusade against executive pay at state-controlled companies, describing a wage cap of €450,000 ($569,000) a year for bosses as a matter of ‘justice and morality,’” according to Dan Milno in The Guardian “The government expects to publish a decree on the pay cap next month. Turning the screw on executives, it will then introduce a bill in parliament later in the year to address stock options, so-called ‘golden parachute’ clauses and other components of executive salary packages.
Readers of CEO Payday will know even the pre-cut salaries of these CEOs are beneath consideration by American CEOs running companies of similar size. For most CEOs of major American companies, a salary of $569,000 is something you pay your brother-in-law.
The chairman and CEO of Electricite de France, Henri Proglio, will take about a 70% pay cut from his 2011 salary of €1,588,000 (approx. $2 million). The man who runs the electric utility for France will now earn just over $500,000.
- Kevin Burke, CEO of Con Edison, New York’s electric utility, earns $10,965,000.
- James E. Rogers, CEO of the Charlotte, NC electric utility Duke Energy, earns nearly 6x ($8,780,258) what poor Proglio earned before his pay cut.
Imagine the humiliation Luc Orsei must feel when he meets with his American counterparts. The CEO of Areva, the French quasi-public company which controls billions in mines and nuclear reactors, was already a poor relative earning €679,000. Now he, too, will be taking a pay cut.
- What must Donald M. James, CEO of Birmingham, Ala. mining company Vulcan Materials Co. think? He earns $8,073,000. M. Orsei is about to earn barely 12x the average worker salary at Vulcan, which is $34,000. James earns $8 million more than most workers.
How can these French CEOs stand to continue working? CEO payday is full of reports of American boards of directors commonly paying $10-75 million “retention bonuses,” allegedly out of fear the CEO will jump ship for greener pastures. There may be some experienced French CEOs for hire. Paying them merely 5-10x what the will be earning could save U.S. companies serious money.