The reported full pay items for 2008 reveal a general and clear drop of managing directors pay in France. In 2008 CEOs of the CAC 40 index received on average 20% lower total packages including grant value of stock-based remuneration (–17% in 2007 compared to 2006) while CEOs remuneration of the top 120 French companies dropped by 18%. A similar trend (-15%) reduced the full pay of the 949 members of the executive committees of the SBF 120 index.
Most of this drop is to be attributed to share-based items, but also bonuses were lower. As a result the cash part of the total package have increased from 55% to 60% for CEOs of the CAC 40 index, and from 57 % up to 70% for CEOs of the SBF 120 index for which the CEO remuneration was on average made up of a 30% fixed part, 35% of bonus and 35% of share related items, still substantial for a crisis year.
The average total pay of the CAC 40 CEOs amounts to € 3.6M comparing to €4.7M in 2007 : this average pay no longer exceeds the Proxinvest ceiling for socially acceptable pay of 240 times the French minimum legal salary (“SMIC” - €4.3M).
For the first time, Proxinvest survey surveyed cash remuneration of European top listed CEOs. A European composite index was built, made up of 70 listed European companies (DJ Eurostock 50 companies plus ten top Swiss and top British firms). Within this index cash remuneration of French CEOs reached on average 2.3M€ in 2008, an amount lower than the €3.1M average and than their Italian ( 2.5 M€), British (3.1 M€), German (3.7M€), Spanish or Swiss (4.5M€) colleagues but above Dutch (2 M€) and Belgian (1,5 M€) CEOs.
An item for concern as recognized this week by the French Financial Market Authority (AMF), the generous €864,225 average pay of non-executive chairmen of the CAC40 companies in France has evaded any normal legal control of the general meeting of shareholders. These French non-executive chairmen are on average better paid than their European colleagues, far abobe Dutch and German chairmen (€0.25M). In contrast, non-executive Directors at French companies are, with an average of €67,000, individually less
paid than most of their European colleagues of the 300 companies of the FTSE Eurofirst index, and for example far below British (€138K), Swiss (€170K), Italian (€190K), and Spanish (€240K) non-executive directors.
Investors voting policy is the most efficient tool for an appropriate control of the top executives pay. The vote on the pay of non executive chairmen, the transparency of supplementary pensions plans and quality of performance criteria adopted for bonuses and share-based plans will be important areas of concern for investors in 2010.
As disclosure improved responsibility fell in 2008-2009. Proxinvest supports the AFEP MEDEF recommendations for more disclosure and more reason in the remuneration process but suggests to promote the role of the shareholder vote to better limit complacency.
Paris, December 9th 2009
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