France Asks Auto Execs to Cut Bonuses in Return for State Aid

The French government yesterday agreed to provide financial support to local automakers but only if struggling companies agree to cut bonuses paid to chief executives, Autonews wrote in a report published today. The French economy minister Christine Lagarde said it is extremely important to help local companies in order to preserve jobs and avoid a serious hit over the national economy. France would provide up to 6 billion euros (that's about $7.79 million) to car manufacturers, Autonews wrote, if they agree to prevent job looses and other major cost-cutting measures.

Following Lagarde's comments, Renault Chief Operating Officer Patrick Pelata said that Renault's chief executives' bonuses have been put on doubt since June, as the company started experiencing financial problems due to the economic recession since mid-2008. Renault's bonuses depend on the annual financial results so, in case the company goes short on cash, all extra payments may be canceled.

However, a PSA spokesman said a decision is expected to be announced in early February, the time when the company will publish the 2008 results. PSA CEO Christian Streiff didn't say too much about these full-year statistics, but said it expects 2009 to be a terribly difficult year, Autonews wrote.

France isn't the first country that agrees to provide financial support to domestic automakers, with the American soap-opera making the headlines all over the world. In addition, the Swedish authorities agreed to help struggling Volvo and Saab but insisted it has absolutely no interested in buying stakes in one of the two companies. Moreover, Sweden repeatedly said that parent companies Ford and General Motors should concentrate more on the restructuring plan of these two automakers, despite reports claiming the two American giants aim to sell their Swedish brands.