A French Approach to Curbing C.E.O. Pay

Can you imagine the uproar if a court had ordered John Thain to repay the New York Stock Exchange for predecessor Dick Grasso's nine-figure bonus? Or if a judge had ruled that Frank Blake was on the hook to reimburse Home Depot for Bob Nardelli's $210 million golden parachute?

Well, it may still be a hypothetical scenario in the U.S., but earlier this month a French court ruled that Rhodia Chairman Yves Rene Nanot and Chief Executive Jean-Pierre Clamadieu were responsible for reimbursing the cost of a former C.E.O.'s 2 million euro ($2.7 million) severance package.

The French chemicals firm said today that the two men would appeal the ruling -- a decision which, going by Rhodia's account at least, seems a little preposterous.

First, for the background: Jeane-Pierre Tirouflet was forced out of Rhodia in 2003, after five years as C.E.O., and received a retirement bonus of 5.3 million euros and a severance payment of 2.1 million euros.

Tirouflet left the firm in financial crisis and one of its large shareholders, Belgian firm Valauret, complained about the decision to give that sum of money to a leader that they saw as incompetent.

Big golden parachutes are about as popular in France at the moment as they are in the U.S. Though the amounts in question at Rhodia were modest compared to the hundreds of millions doled out to the C.E.O.'s of some American companies under fire, it's not a big surprise that the firm's shareholders would balk.

But, the odd part of the decision by the commercial court in Nanterre is that the court found nothing improper about the October 2003 payout in itself ... but, nevertheless, found Nanot and Clamadieu at fault for not contesting on behalf of shareholders a severance package that the court itself found to be legal. Get it?

The judge essentially approved the outcome but gave the men an "F" for effort.

We will never, as long as we live, truly understand the French.

by Liz Gunnison