Dexia Told to Review Salary Rise as Belgium Cites Ethics

Dexia SA (DEXB), the bank being wound down at the expense of Belgian and French taxpayers, faces government opposition to a salary increase for three executives following their promotion to the management board.

Dexia’s management should reconsider the bank’s remuneration policy, Belgian Finance Minister Koen Geens said in a an e-mailed statement. His French counterpart Pierre Moscovici called the pay rises “not logical” in comments made to RMC Radio earlier today.

“This exercise should take into account a justified ethical sensitivity in society, new Belgian rules governing pay for banks that received state aid and the need for talent to minimize losses for taxpayers,” Geens said.

The intervention of the two governments, which control 94 percent of Dexia’s voting rights, comes three days after Le Journal du Dimanche reported that the promoted executives got a 30 percent raise to 450,000 euros a year. Dexia was forced into nearly complete government ownership after getting 5.5 billion euros ($7.45 billion) in extra capital from Belgium and France at the end of 2012. Losses have since consumed 777 million euros of those taxpayer funds.

Caroline Junius, spokeswoman for Dexia, wasn’t immediately available for comment when contacted by Bloomberg News.

CEO Pay

Dexia is enlarging the board to six members from three to ensure executives’ functions were consistent with the bank’s mission of winding down assets at the lowest possible cost to shareholders, it said in a statement last month.

Chief Executive Officer Karel De Boeck was awarded a salary of 600,000 euros a year, in excess of French government limits, when he was appointed in August 2012. Former board member Antoine Gosset-Grainville, representing French state-owned Caisse des Depots et Consignations, unsuccessfully opposed De Boeck’s proposed salary, which was approved by the board four months before the government took ownership. He cited the government’s practice of capping board member compensation at 450,000 euros a year.

Belgium limits executive salaries at state-owned firms to 290,000 euros, though the curbs don’t apply to publicly traded companies. Dexia was unchanged at 4 cents at 3:43 p.m. in Brussels today.

To contact the reporter on this story: John Martens in Brussels at jmartens1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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