Economy. How are the salaries of French bosses regulated?

19 million euros. This is the compensation that Carlos Tavares, boss of Stellantis, ex-PSA group, will receive for the year 2021. To this amount could be added as much as 47 million euros in premiums, for a total of 66 million euros. And this despite the advisory vote of the shareholders of the Netherlands-based company. Indeed, met in the general meeting, they were more than 52% to reject the idea that the French leader receives this compensation.

A record amount for a French leader, and one that calls into question the way high salaries are framed.

Are executive salaries capped in France?

In France, only the salaries of bosses at the head of public companies are capped. Since 2012, the remuneration of directors of state-owned companies may not exceed EUR 450,000 per year, or slightly more than EUR 37,500 per month.

On the other hand, the situation in the private sector is very different and the leaders can “set the fee as they please”, explains Charles Pinel, managing director of Proxinvest, a consultancy that publishes a ranking of the fees involved every year. by business leaders. Simply put, “there is no limit”.

Are private sector wages still regulated?

Even though there is no ceiling in France, “there are control mechanisms”, underlines Charles Pinel. “The most important thing is quite powerful: it is the general meeting of shareholders that has to approve the remuneration of directors,” he continues.

Indeed, if in the Netherlands the shareholders of Stellantis could not force Carlos Tavares to accept a lower compensation, then in France “the vote of the shareholders is binding”, assures Charles Pinel. In fact, “not all elements of the variable remuneration awarded to the manager can be paid out if it has not been approved by the general meeting,” he adds. In other words, if Stellantis were based in France, Carlos Tavares would not be entitled to his EUR 47 million variable share if his shareholders had opposed it.

In addition, “large companies refer to the AFEP/MEDEF governance code,” specifies Charles Pinel, namely a set of recommendations prepared by the French Association of Private Enterprises (AFEP) and the French Enterprise Movement (Medef). Among them are recommendations on high salaries, which dictate that the remuneration of top business leaders should be measured. “But recommendation is not an obligation,” notes Charles Pinel. Again, nothing binding.

Who are the highest paid managers of major French companies?

According to Proxinvest’s 2021 annual report, published last November, it was the CEO of Dassault Systèmes, Bernard Charlès, who received the highest remuneration in 2020 (20.6 million euros in total), ahead of Daniel Julien, CEO of Teleperformance (17 million) and Mike Manley, former manager of FCA (Fiat Chrysler), with 14.9 million euros. Last November, Stellantis had failed to communicate Carlos Tavares’ remuneration.

The lowest paid boss of the 120 largest French companies was a woman, Stéphane Pallez, CEO of La Française des jeux, with 380,000 euros.

Are the salaries of French leaders disproportionate?

“Shocking and outrageous,” Emmanuel Macron called Carlos Tavares’ reward on Friday. Not for nothing: according to Loïc Dessaint, chairman of Proxinvest who has been studying the remuneration of French business leaders for 25 years, the boss of Stellantis is “the highest paid in history”, as he explains to franceinfo.

Charles Pinel confirms this sample fee:

On average, the compensation of CAC 40 companies is around 4 to 5 million euros. There the boss of Stellantis will hit at least 19 million. And that is a very high amount compared to comparable European companies.

Note that in the United States the big bosses are paid even better, with an average of 15 million euros per year.

Is it possible to propose capping mechanisms?

This Friday, Emmanuel Macron spoke out for “ceilings” of compensation for the big bosses at the European Union level. “We have to fight in Europe so that we get compensation that cannot have been abused,” estimated the president of the republic, who ran for re-election on April 24, on the franceinfo. “Otherwise society will explode at some point,” the head of state added.

Which does not mean that if he is re-elected, Emmanuel Macron will raise this issue at European level. “There are regular scandals, amounts that make headlines. In these cases, and even more so during an election, politicians tackle the subject and threaten to set up a system that would limit pay,” said Charles Pinel.

Since the Covid, the salaries of big bosses are rising again

At the start of the Covid-19 epidemic, in 2020, “many managers played the game by not paying themselves a fixed salary or by reducing their variable share, thus lowering their remuneration. That is quite positive”, recalls the CEO of Proxinvest.

Specifically, in 2020, the remuneration of top executives decreased by 14% compared to the previous year for the 120 largest listed companies in France.

On the other hand, two years later, “we are seeing a catching up with many leaders significantly increasing their pay,” he specifies. An increase to be observed at the end of the year, with the publication

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