Top executives at Societe Generale have handed back thousands of stock options after French President Nicolas Sarkozy warned the perks were “unacceptable” given the state aid enjoyed by the bank, an internal letter showed on Sunday.
Four Societe Generale bosses including chief executive Frederic Oudea received tens of thousands of stock options each last week, but agreed on Friday not to exercise them while the bank continued to benefit from state aid.
Faced with continued attacks, they announced in a letter to staff at the bank that they would give them up entirely.
“To cut short the controversy, we have decided to renounce these stock options and have informed the board of administrators,” read the letter, which was to be mailed yesterday.
Speaking a day after a million people took to the streets to demand a state boost to low wages, Sarkozy said on Friday it was “unacceptable” for executives of firms bailed out with state aid to receive bonuses and stock options.
The president made it clear he was referring to Societe Generale, which has received state loans worth 1.7 billion euros (US$2.3 billion) to help it through the financial crisis.
“Obviously, some people are having trouble understanding what we are saying. Wherever there are layoffs, wherever there is state aid, bonuses and stocks options are unacceptable,” Sarkozy said.
“You cannot seek state money and [at the same time] draw up a plan to give out shares and bonuses,” he said.
The outrage in France about bonuses in the financial sector has been mirrored in other countries where vast amounts of state money have been used to bail out struggling institutions.
US President Barack Obama is facing widespread anger over bonuses paid to managers at nationalized insurance giant AIG, with the issue of pay in state-assisted firms now a politically toxic subject.
In the UK, the former head of beleaguered bank RBS, Fred Goodwin, is resisting government pressure to give up a monthly pension of about £700,000 (US$1 million) despite overseeing record losses.
Stock options enable executives to buy a specific number of shares in their company in the future and are frequently used as a form of bonus or incentive to encourage managers to boost share value.
Societe Generale said last week it would award 150,000 options to chief executive Oudea and 70,000 to chairman Daniel Bouton.
Prior to the change of heart by the Societe Generale bosses, French Economy Minister Christine Lagarde stepped up her criticism of the bank on Sunday, saying it was time the group “came into step with the public interest.”
She also questioned the role of stock options, casting doubt on their effectiveness as a motivational force and the ethics of awarding them.
Bouton is familiar with pressure from the French government after facing sharp criticism and suggestions he should step down following a rogue trading scandal in 2007 that cost the bank 4.9 billion euros.
After offering to resign, he ultimately relinquished his responsibilities as chief executive and chairman and now holds only the chairman position.
Last Tuesday, the French government asked the employers association Medef and the Association of French Private Enterprises to come up with a corporate governance code to encourage company bosses to renounce their bonuses if they are cutting jobs.
Societe Generale has said it would create jobs in this year.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source