Human Capital & Careers

French Plan: Mandate Option Retention

To link workers' interests with those of their employers, France would force employees to retain their shares for the length of their jobs.
Stephen TaubSeptember 22, 2006

The Finance Minister of France, Thierry Breton, trotted out a plan earlier this week to get employees to hold on to a portion of their stock options until they leave their jobs.

Breton said in a radio interview that he thinks the plan will better align workers’ interests with those of their companies, according to the Associated Press. “These proposals are in companies’ interests and in the interests of Paris as an investment center,” he reportedly said.

In the United States, of course, it’s not uncommon for top executives to exercise all of their vested options and unload the underlying stock while still employed with the company. Of course, most executives also own large amounts of options that don’t vest until many years in the future.

Breton’s remarks were a response, in part, to a stiffer proposal by former Prime Minister Edouard Balladur, according to the AP. In fact, he said, the details of the proposals on stock options have yet to be worked out, the wire service reported. That means companies and shareholder-rights activists will have time to prepare for a tough fight over the issue.

The move comes at a time when the ever-widening options-backdating scandal in the United States also has raised many questions about the effectiveness of granting options as a performance-inducing mechanism. Therefore, it’s likely that shareholder activists, legislators, and corporate executives here will be watching France carefully to see how Breton’s plan plays out.

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