Strict limits have been placed on the bonuses of executives of companies (in particular banks and companies in the automotive industry) that have received State aid. This measure was taken after it transpired that a major French bank, Société Générale, which had received state funding as a result of being hard hit by the financial crisis, went on to pay large bonuses to its top executives.
These measures are generally effective as of April 1, 2009 and April 23, 2009 for the automotive industry.
The main points of the decree are as follows:
- French companies that have received government aid will be subject to stringent limits on the award of bonuses and stock options to top executives.
- Effective April 23, 2009, the companies in question are not allowed to establish new defined benefit plans for their top executives until the end of the year 2010.
- Top managers in these companies will have to renounce share options and free share awards.
- Performance-related bonuses may be banned in the case of “large-scale redundancies.”
- These measures are expected to remain in force until the end of 2010.
- Severance packages for executives at state-controlled companies are limited to two years' salary, and not permitted at all if the company is going through "serious economic difficulties" or if the departing executive hasn't met pre-established performance criteria.