How Macron intends to cap CEO pay at European level

Posted Apr 15, 2022, 6:07 PM

In the middle of the between-two-rounds, Emmanuel Macron did not go there by four paths, Friday morning on franceinfo, to qualify the remuneration package of Carlos Tavares, general manager of the car manufacturer Stellantis, under 2019. The President of the Republic deemed it “shocking and excessive”, speaking of an “astronomical” amount about the 19 million euros in bonus planned for the former CEO of PSA, which merged with FCA in early 2021 to become Stellantis . The compensation package for the group’s executives was rejected by 52.12% of the votes of shareholders on April 13, but their vote has only an advisory value.

Emmanuel Macron immediately declared himself in favor of remuneration ceilings to be defined at EU level. “We must set ceilings and have governance for our Europe that makes things acceptable, otherwise society, at some point, explodes. People can’t have purchasing power problems […] and see these sums”, he explained on the air, while Marine Le Pen, his rival in the second round of April 24, capitalized a lot, during his campaign, on the question of purchasing power.

“We must be able to put a ceiling, if we do it at European level, it can work,” said the head of state, recalling that Stellantis has its headquarters in the Netherlands. It remains to be seen how to go about it. According to our information, initial discussions have been initiated in Paris after a quick legal analysis. A priori the French government would favor the same method as for the European minimum wage, an ambitious text carried by the French presidency of the EU, which extends until June 30.

This directive, which is being finalized between the Twenty-Seven, the European Parliament and the Commission, does not aim to establish a European minimum wage which would apply in all States. This would be contrary to the treaties and economically untenable. The text leaves free rein to the States on the setting of the minimum wage level qualified as “adequate”, with an obligation to regularly inform the Commission.

To cap the remuneration of executives, we could propose a framework directive in the same vein, without a uniform quantified ceiling but with a method and an objective of means. At the Commission – which has the monopoly of legislative initiative – the project could be entrusted to the Commissioner for Justice, Didier Reynders, and to Thierry Breton, Commissioner for the Internal Market. The two men have already worked together on a draft directive adopted last February on the duty of vigilance of large companies in their supply chain. Their text also looked at the bonuses of executive directors of companies.

A new directive on the remuneration of the bosses of large companies should be approved by the Twenty-Seven and the MEPs, which will take at least 18 months after the adoption of the project by the Commission.

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