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French executives face pension capping







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Published: 09:03 - 20/07/09


Pension top-ups for French executives are likely to be capped next year when France reforms its public pension regime, according to the country's stock market regulator.

Jean-Pierre Jouyet, head of the Autorité des Marchés Financiers and a former member of the government of Nicolas Sarkozy, said it made good sense for the government to legislate on executive pensions.

"Managers and chief executives have to understand that if a collective effort is being asked of the French people, then they have to take part," he said from his offices overlooking the Corinthian columns of the Paris stock exchange.

"From the moment the president indicated there would be a big reform of pensions in 2010 and that there would be legislation on this, I don't imagine that these gold-plated pensions will be left out."

Pension payoffs and executive remuneration, particularly in the financial sector, have sparked public anger in France and around the world after governments were forced to bail out banks to prevent a global financial meltdown after the collapse of Lehman Brothers last autumn.



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Politicians have tried to stem the anger by calling for tighter rules on pay and compensation to discourage the excessive risk-taking seen to have contributed to the global financial crisis. This is expected to be one of the main points of discussion at the G20 meeting in Pittsburgh in September.

Mr Jouyet, the former secretary of state for European affairs, warned the consequences could be severe if the G20 lost the will to push through difficult reforms. "Up until now the G20 has been asking how to get through the crisis. Now we need to ask ourselves how to build a system with a level playing field between US, Europe, Japan and emerging markets," he said.

"The main risk is that they say we have done the essential when we could have gone further."

Leaders must overcome differences and agree common and sustainable guidelines on issues such as remuneration, particularly in the financial sector, he added.

"The risk is that we return to business as usual. It's a risk that is illustrated by what is happening, for example, at Goldmans [where bonuses this year will hit a record high].

"If we learn that, after the governments and taxpayers injected all this money, people working in the financial sector are better off than before and there has been no change in bonus and remuneration, we shouldn't be surprised if people think this is abnormal. If we haven't learned the lesson of what happened, there will not be much time before the economic and financial crisis becomes a social and moral crisis. All this is linked and each actor needs to understand that."

France's chief market watchdog called on G20 leaders to take advantage of the co-operation between international regulators in the search for a more efficient and secure management of the global financial system.

"Regulators are exchanging information and G20 has to capitalise on what regulators are doing," he said. "We are progressing well ... [but] we need clear guidelines on the organisation of markets, the fields of regulation, accounting rules, etc."



ΠΗΓΗ: FT.com
Copyright The Financial Times Ltd. All rights reserved.

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