Connect to share and comment

Curbing executive pay in Europe

PlacardEnlarge
(Globalpost/GlobalPost)

This is a summary of some efforts in Europe to cut down on "golden parachutes" and very high remuneration, after Swiss voters backed moves to curb executive pay in a referendum on Sunday.

On Monday, the European Union's executive commission welcomed the Swiss vote as "very positive", and highlighted the 27-member EU's plans for legislation this year to give shareholders more control over corporate pay.

- AUSTRIA: Golden parachutes are banned in banks in which the state owns a stake. In private banks, golden parachutes of more than 500,000 euros ($650,000) are fully taxed. Below that figure, the beneficiaries benefit from a tax cut of six percent.

- BRITAIN: The government wants to limit excessive salaries for executives in companies which are underperforming, without intervening directly.

It thus announced last year its intention to give more power to shareholders to contest top executives' pay and wants, under legislation now under examination in parliament, to force companies to exercise more transparency when it comes to executive pay.

- FRANCE: Golden parachutes are not forbidden but are subject to stiff social charges and restrictions. The government recently raised taxes on such measures.

Compensation is closely regulated and limited in general to a maximum of two years of the executive's highest pay.

Pay received by the heads of state-owned companies was capped in mid 2012.

- GERMANY: A 2009 law controls the pay of those who sit on a company's board of directors, and the government said the result of the Swiss referendum was "interesting."

- ITALY: The idea of attacking golden parachutes or reducing remuneration in the private sector has not gained much traction until now.

But for the first time, the former government of Mario Monti has in its austerity packages cut into the "golden salaries" of public sector executives.

It has thus capped at 294,000 euros per person the salaries of 18 company chiefs who were costing the state more than five million euros. Among them were the chief of police and of the tax office, and the chairman of aerospace and defence giant Finmeccanica.

- THE NETHERLANDS: The Dutch government is currently working on a draft law which would limit golden parachutes to a maximum of 75,000 euros. The Hague hopes that the law will take effect on July 1, 2014, according to a spokesman for the social and employment ministry.

- SPAIN: Since January 1, the Spanish government has penalised compensation paid to outgoing leaders of big companies by abolishing a tax break available until then on part of the pay.

- SWEDEN: All financial payoffs are negotiated individually when the contract is signed.

In 2011, Stockholm toughened the rules on bonuses, with employees considered to be "risk takers" seeing the payment of bonuses exceeding 100,000 kronor (around 12,000 euros, $15,500) spread out, with 60 percent withheld until three years have elapsed.

Under Swedish rules, heads of enterprises capitalised at more than 500 billion kronor must also receive part of their bonus in the form of shares or other instruments linked to the performance of their company.

bur-frd/jmy-wai/jmm

http://www.globalpost.com/dispatch/news/afp/130304/curbing-executive-pay-europe