The Covid crisis has already had quite a few economic impacts around the world.
In France, the government has put in place a vast program of economic support to prevent massive lay-offs. Part of the scheme included short-time work subsidised by the government. This was massively used by companies operating in France, with up to 12.5 million employees in the private sector who were placed in short-time work (partial activity). During short-time work, the employees only get 84% of their usual base salary.
As a result, the government asked for some sense of solidarity or civic spirit from the companies, especially the bigger ones.
Measures taken by the CAC 40 companies during the Covid crisis
The first measure taken by the CAC 40 companies was to decrease the amount of dividend paid in 2020 to their shareholders, with one third of them who cancelled the dividend payment in 2020.
After their staff and shareholders saw a drop in their expected revenue for 2020, it seemed reasonable that CEOs would also make a gesture.
This resulted in about half of CAC 40 CEOs announcing that gave up part of their salary (whether it is their base salary or their bonus) for the year 2020. The amounts actually differ quite a lot among the 40 companies. Engie’s CEO gave up 15% of his base salary for 2 months, which is less than 50k euros, while Kering’s CEO gave up 25% of his base salary for 9 months and 100% of his bonus for the year 2019 to be paid in 2020, which rather represents 4 million euros. LVMH’s CEO is giving up about 2.5 million euros for 2020, and PSA’s CEO almost 2 million euros.
The amounts of money given up by the 7 most concerned CEOs add up to 20 million euros, while the sum of the other 15 CEOs only adds up to approximately 2 million euros.
AFEP, the French Association of Private Enterprises, representing more than 100 of the largest private corporations operating in France, gave some guidelines to the big companies regarding the Covid crisis. It recommended that dividends be decreased by 20% compared to last year, and that CEOs give up 25% of their global compensation for the year 2020, to be used in a solidarity fund. While the recommendation on dividends was followed by 75% of CAC 40 companies, it seems that not all CEOs were convinced by the idea to cut down their own wages. Only 22% of them announced a cut in the scale of AFEP recommendations.
70% of CEOs who gave up part of their 2020 salary are running a company which used short-time work public scheme during the Covid.
