FRENCH REACTION:PRESIDENT NICOLAS Sarkozy of France has ordered companies to rein in executive pay and curb rewards for failing top management or face legislation next year.
Businesses were told to comply with a new industry code of conduct, published on Monday, that would restrict severance payments for departing bosses and the award of stock options.
The financial crisis, and public anger over large bonuses to apparently irresponsible bankers, has given impetus to efforts across Europe to ensure pay is appropriately linked to performance.
"The government is determined to re-establish confidence in a capitalism for entrepreneurs," the Elysée palace said.
EU finance ministers yesterday agreed to review national rules and industry best practices on pay, particularly disclosure and performance criteria.
Mr Sarkozy and his British, German and Italian counterparts on Saturday agreed for supervisors to draw up codes of conduct to ensure that bankers' pay "does not focus on short-term performance and does not encourage excessive risk-taking".
They said supervisors "should take into account this dimension in assessing bank's risk profiles", a move that could potentially force a bank to raise its capital base.
Even Britain's Conservatives - traditional friends of the City of London - have said banks that receive injections of capital from the state should in return curb the pay and bonuses of their staff.
There was outrage in France last week when it emerged that the outgoing chief executive of Dexia, the bank rescued in a government-led bailout, was eligible for a payout of up to € 3.7 million.
In response, Paris effectively forced Dexia chief Axel Miller to give up his golden parachute.
Several European governments have vowed to act against boardroom excesses, but so far only the Netherlands has acted, introducing higher corporate taxes on generous "golden parachutes" and large pension contributions under a Bill still going through parliament. - ( Financial Timesservice)