Pay hike for GDF Suez number two

There's a certain amount of polemic (a favourite word within the French media) going on here at the moment over the pay increase Jean-François Cirelli, the vice-president of the French energy giant GDF Suez, received last year.

A cool 180 per cent according to the company's annual report released on Wednesday, pushing his salary up from a not-so-miserly €460 000 a year to € 1,3 million!

It was a pay rise agreed last August by the company's conseil d’administration (board of directors) to "take into account the growth and the size of the new group created by the merger of Gaz de France and Suez" a month earlier

A major problem of course in all of this - and one that has been mentioned throughout the media - is that GDF Suez, although in essence a private company, in that peculiarly French way has as its biggest shareholder.....yep you've guessed it, the French government.

A stake of 35.7 per cent to be precise.

So in a sense the pay increase was done with the agreement of the state.

GDF Suez came about in July last year through the merger of the previously 80 per cent state-owned Gaz de France and the French-based multi national, Suez.

Putting it simply, the result was an international energy and utility giant.

The justification for the huge hike in Cirelli's salary would appear to be two-fold.

Firstly according to Nicolas Cori, a journalist for the left-of-centre national daily, Libération, the decision was taken to realign the salaries of the top brass coming from Gaz de France (among them Cirelli) with those from Suez as a result of the merger.

And secondly the group posted profits in 2008 of €6.5 billion, an increase of 13 per cent.
- so it's not doing at all badly.

Oh yes, and let's not forget that management at the company also caved in to union and government pressure last month to renounce their rights to stock options.

But there's still something surely of a mixed message in all of this.

France has not been untouched by the financial crisis and economic difficulties around the world.

Unemployment is rising, companies are shutting down facilities, the government is still telling us all to tighten our belts and urging restraint.

And as Cori asks on his blog, "What exactly does it say about the 'moralising' of capitalism by the French president, Nicolas Sarkozy?"

He argues (and many would appear to agree if the headlines in the French media are anything to go by) that in a real sense the government - as the company's biggest shareholder - has also given the "nod" to what by anyone's standards is a huge pay increase.

Oh yes, just to complete the picture, you might be thinking that Cirelli is the head honcho at the company, but he's not.

Admittedly he's number two, but he still has a long way yet to go to match the salary of Gérard Mestrallet, his boss and the chairman and chief executive officer of the company.

Hang about and hold on to your jaw before it crashes to the floor.

Mestrallet's pay packet for 2008? Um...€3,1 million - just an 18 per cent increase.