Companies like Renault will have to pay more attention to shareholder votes against executive pay awards, France’s two main business organisations said on Friday, as they tightened guidelines in the hope of avoiding threatened legislation.
President Francois Hollande, currently weathering protests and strikes against unpopular labour reforms, warned on Tuesday that the government would give legal clout to shareholder votes on pay unless companies acted on them.
Renault sparked outrage after its board waved through chief executive Carlos Ghosn’s 7.2 million euro ($8.1 million) 2015 package despite a non-binding majority vote against it.
The employer’s groups, AFEP and Medef, said amendments to their code of conduct will require company boards to take account of rejection votes and report back to shareholders at the next annual general meeting.
“The code is there to address these issues and it works,” Medef head Pierre Gattaz said. “It’s troubling to hear talk of new executive pay laws and constraints when France is already struggling to improve its business attractiveness.”
The revised code stops short of requiring bosses’ pay to be cut following a rejection vote of the kind suffered by Renault on April 29, instead leaving the final decision to the board.
A corporate governance commission set up to oversee the AFEP-Medef code urged Renault on Thursday to make “significant changes” to its pay practices. Renault had no comment, a spokesman said on Friday.
Some lawmakers are in no mood to wait and have proposed amendments to a business transparency bill that would cap executive pay and subject raises to shareholder approval.
Prime Minister Manuel Valls also said on Thursday that companies should be forced to abide by votes on pay.
“We’ve tried asking companies to show responsibility,” Valls said on RTL radio. “It’s clear that this hasn’t been heeded – so now we must legislate.” ($1 = 0.8912 euros)