pianogonzology: pay-offs

. . . why would you think anything else?

(from Cargonews Asia)

Shareholders of Air France-KLM and Safran voted against big pay-offs for chief executives at the part French state-owned groups as public resistance to lucrative executive pay grows on a continent traumatised by financial turmoil, reported Reuters.

Four-fifths of Air France-KLM shareholders opposed about US$500,000 paid to ex-CEO Pierre-Henri Gourgeon, who also received $1.39 million when he was ousted in October following the airline's poor performance. The stock lost 71 percent last year.

Just over half of shareholders in aerospace group Safran voted against awarding chairman and chief executive Jean-Paul Herteman two years of pay and an extra pension when he steps down. He was paid $1.77 million last year.

The moves, encouraged by the government, are the latest in a series of revolts over pay at annual general meetings as part of the so-called "shareholder spring", which has seen the chief executive of British insurance group Aviva lose his job.

Governments in France and the UK are among those who have promised to get tough on top executive pay as voters grow weary of bank bailouts and the impact of government austerity measures on spending power as the euro zone debt crisis drags on.

France's new Socialist government has said it will flesh out plans to cap the pay of top executives at state-controlled companies by mid-June. President Francois Hollande pledged in his election campaign to limit senior executives' salaries to a maximum of 20 times that of their lowest-paid employee.

In Britain, Conservative Prime Minister David Cameron has promised legislation this year to tackle high executive pay and leaned on bosses to give up bonuses at banks that were partly nationalised in bailouts after the 2008 financial crisis.

Pierre Moscovici, France's new finance minister under Hollande, earlier welcomed the Safran shareholder vote while calling for similar action at Air France-KLM. The state owns 30 percent of Safran and 15.9 percent of Air France-KLM.

"The government is thus again giving a strong signal of its will for change on the question of remuneration," Moscovici said in a statement.

Ex-Air France-KLM CEO Gourgeon was given the additional $500,000 in return for not working for a competitor for three years. He received an annual salary of close to a $1 billion plus a bonus of $324,731.

Current Air France-KLM CEO Jean-Cyril Spinetta told shareholders that Gourgeon had the legal right to keep the money, adding that it was justified because Gourgeon had been approached by several competitors, notably Gulf carriers.

In an interview with France Inter radio earlier on Thursday, however, Moscovici called on Gourgeon to reimburse the payment."Indeed, morally Pierre-Henri Gourgeon should himself pay it back," Moscovici told France Inter. "The bonus has already been paid, but we are saying very clearly that this is not the right thing to do."

Hollande said before his election that several measures were needed to restore fairness in France, a dig at predecessor Nicolas Sarkozy, whose policies Hollande alleged favoured the rich.

The measures included a top income tax rate of 75 percent on income above $1.23 million, in addition to the senior executive pay cap.