PARIS – French workers burned tires, marched on the presidential palace and held a manager of U.S. manufacturer 3M hostage Wednesday as anger mounted over job cuts and executive bonuses.
Rising public outrage at employers on both sides of the Atlantic has been triggered by executives cashing in bonus checks even as their companies were kept afloat with billions of euros (dollars) in taxpayers' money and unemployment soars.
As the U.S. administration seeks ways of recouping some of the $165 million in bonuses paid to executives at insurance giant American International Group Inc., kept afloat by $170 billion in taxpayer bailout money, French President Nicolas Sarkozy is threatening new laws on bonuses and golden parachutes.
Sarkozy is also trying to deflect anger against his government's failure to ward off the job losses and economic hardship that comes with recession.
The euro3.2 million ($4.3 million) exit bonus paid to the former head of Valeo SA, an auto parts maker that received state aid, has fueled outrage in France. Controversy also grew Wednesday over bonuses at brokerage company Cheuvreux, a unit of a French bank that got state handouts.
"The risks of repercussions of ill-feeling from employees and from a political backlash are real if execs continue to be compensated at pre-crisis levels," said Cubillas Ding, a senior analyst at financial research firm Celent. "Bonus and pay cuts are now seen as the politically correct thing to do."
Rising public outrage at employers has led to kidnappings, marches and strikes in France, a country with a long tradition of labor unrest.
A French 3M executive was being held hostage for the second day at a plant in Pithiviers, south of Paris, as workers protested layoffs. The situation was calm, however, with labor talks taking place there Wednesday.
Detained 3M manager Luc Rousselet told an AP reporter "Everything's fine" and workers planned to bring him mussels and French fries for dinner.
In Paris, rage boiled over into an angry march on the presidential palace and a bonfire of tires set alight by workers from Germany's Continental AG, whose auto parts factory in Clairoix, northeast of Paris, plans to shut down in 2010.
Similar resentment is emerging in many parts of Europe. Vandals smashed windows early Wednesday at the home of the former CEO of the Royal Bank of Scotland. Sir Fred Godwin resigned in disgrace but waltzed out at age 50 with an annual pension of about 700,000 pounds ($1.2 million).
Bonus payments are dominating headlines in Sweden, which prides itself on a relatively egalitarian society. Big companies like truck maker Volvo and bank SEB have been forced to withdraw compensation schemes for top executives amid public outrage.
And in Switzerland, top executives at UBS AG, which is benefiting from a $60 billion government bailout, have given up their 2008 bonuses.
Henri Guaino, a top aide to Sarkozy, issued an ultimatum to French employers, saying in a radio interview Wednesday that the government will step in and legislate if France's main employers' federation, Medef, doesn't come up with proposals setting guidelines on executive pay by March 31.
Medef chief Laurence Parisot was expected to respond to Sarkozy shortly.
Executives from government-assisted banks like Societe Generale to Dexia have come under fire over their compensation, as the global crisis has prompted the state to take a bigger role in corporate France.
Thierry Morin, the former head of Valeo, was awarded a euro3.2 million ($4.3 million) exit package after citing "strategic differences" and leaving. The government, which owns 8 percent of Valeo, said it will oppose the payment, and even Parisot urged Morin to hand back his check.
The mood soured further after Liberation newspaper reported Wednesday that Cheuvreux executives will get bonuses worth euro51 million even as the bank is cutting 75 jobs. Its parent company, Credit Agricole, took euro3 billion in a government bailout plan last year.
The bank declined to confirm the amount, but said 2008 bonuses will be paid. Job cuts are on a voluntary basis and concern 31 positions, the bank said.
"There shouldn't be any more bonuses, distribution of free shares or stock options in companies which get state aid" or who make large job cuts, Sarkozy said late Tuesday in the northern town of Saint-Quentin.
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Associated press writers Scott Sayare and Laurent Pirot in Paris, George Frey and Antje Homburger in Frankfurt, and Ben McConville in Edinburgh contributed to this report.
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