Commentary: France: A Ceo's Pay Shouldn't Be A Secret

Marc Vienot has forged a successful second career as the conscience of France's corporate elite. Four years ago, the ex-chairman and CEO of Societe Generale helped France emerge from a series of corporate scandals by heading a commission to craft guidelines on corporate governance. Much to everyone's surprise, French companies followed Vienot's recommendations. By nominating independent board members, the companies took a much-needed step toward breaking up France Inc.'s old-boy network, which granted CEOs rubber-stamp approvals and left shareholders holding the bill for management's misdeeds.

Now, Vienot is dropping the ball. He flinched uncomfortably during a press conference on July 22 when asked why he failed to recommend in a new report that executive pay be disclosed in annual reports. His response: Revealing it would just help rivals lure French CEOs away with better pay packages. He also quipped that Americans like bragging about their pay, and the French don't.

That undercuts the good work done by the committee to date. Shareholders deserve to know the compensation of top execs and how much of it is performance-related. And there is an even more compelling reason to go public with the numbers: to puncture the prevailing French attitude about money.

The French still think it's noble to inherit a fortune and dirty to earn one. By going public with their pay, CEOs would force French society to confront its schizophrenic feelings about wealth. Equating pay with performance instead of shame would help create a more entrepreneurial class of managers. It would reward execs for achievement rather than attending the right school. "Pay transparency would create a virtuous circle. It would establish an incentive to perform," says one French investment banker.

A few CEOs have been brave. AXA's Claude Bebear, who earned $2.5 million in salary and bonuses last year, has been publishing his salary, bonus, and stock options since the company listed on the New York Stock Exchange in '96. He is among a handful of French execs whose compensation, including stock options, is commensurate with that of U.S. and British CEOs. By contrast, CEOs of France's 40 largest companies earn up to 50% less than their American and British counterparts, consultants say. "They should reveal their pay to get paid more competitively," says an exec at a U.S. investment bank in Paris.

That's still radical thinking in France, the last remaining Western country where the Communist Party is part of the government and capitalists are vilified by leftists. That's why Vienot's committee is afraid to recommend disclosure of CEO pay.

And that's why it should. With technology and a common currency driving tumultuous change in Europe, it wouldn't take much to topple the ancien regime. A new generation of achievers is waiting in the wings--and watching for a signal from Vienot. Bon courage.