What does the dole queue think of golden parachutes?
Issued on: Modified:
Are golden parachutes justified? Should they be banned? Or at least restricted by a law? Should the state get a say in the debate? Contrary to what you might think, our jobless Observers aren’t necessarily so quick to condemn bosses.
A popular song by Frenchman Alain Souchon released last year takes a light-hearted - yet pertinent and topical - poke at executives enjoying their "Golden Parachutes".
The song is gaining in popularity as news of massive payouts and bonuses comes to public attention; executives rewarding themselves handsomely while their humble minions are laid off in droves.
The latest bonus story to hit the headlines is that of former Valeo CEO Thierry Morin, who is looking at a payout of €3.26 million at a time when 10% of the automotive workforce faces the dole queue.
French President Nicolas Sarkozy is refusing to legislate on the subject. But, while calling for a moral rethink of capitalism, he said he will call for a bill to be passed "this autumn" if companies, with their trades unions, can not work out an equitable deal.
"Parachute doré" the song
Alain Souchon's song on the subject, "Parachute doré".
"The state shouldn't interfere"
I wouldn't invite someone like Thierry Morin (CEO of auto supplier Valeo who is looking at a 3.26 million-euro severance package) to my table! It is a great shame that the CEO of a company that fires people should have a golden parachute like that. I can understand the anger prevalent in France.
In the US, some CEOs have decided to reduce their salaries to a symbolic one dollar. It is a fine example of solidarity with their employees.
But one should distinguish between golden parachutes and stock options. I am all for stock options if there are democratically distributed.
It can be an excellent motivational tool as it incentivizes new talent and exploration into new markets.
I can not imagine that the state would go so far as to legislate on this subject. The state should not interfere on a subject like this.
I say bravo that Sarkozy has spoken out on this issue. But in any case his hand was forced...
But I don't think governments should get involved in these negotiations.
There is a risk: if there are limits placed on income, the best managers will simply leave and seek more lucrative employment elsewhere.
Each company should make its own decisions. But they should all exercise more transparency. There is a moral imperative for it.
There is already some transparency, especially with France's - and the world's - biggest companies, but all companies could - and should - take this one step further.
“It’s a scandal!”
Golden parachutes are outrageous and unfair. Firstly, because they drive a wedge between the rich and the poor. Secondly, because the people who get them don't necessarily deserve them.
I am not at all convinced that either their skills, nor their positions merit these kinds of payouts, especially if they have presided over companies that have come close to bankruptcy.
Golden parachutes and stock options add up to pretty much the same thing. Both have the same end result - they create huge disparities in salaries that are not justified.
When Sarkozy talks about a possible bill against golden parachutes, to go into effect in the autumn, I'm convinced it's just public relations waffle.
It isn't what he was elected to do and it won't go in his favour.
On the other hand, Obama was elected to do just that. He says he will do it and he seems to have the will to do so.
Obama's seems to be a more credible response to the crisis. It is certainly less full of moralistic invective.
Furthermore, in this globalised world it is difficult for one country to act alone on issues such as executive bonuses or the equitable distribution of profits.
As for possible legislation, companies should be more transparent on salaries, payouts, bonuses and stock options. It would be a step in the right direction.
Right now companies are obliged to publish their financial results, but many prefer not to and simply pay a fine in order to avoid being too closely scrutinised.
Executive salaries remain a taboo subject even within companies.