Spain Presses Biggest Companies to Rein In Executive Pay

 

Spanish Economy Minister Luis de Guindos called on the nation's biggest companies to rein in executive pay, saying a recovery from the economic crisis will be quicker if citizens feel sacrifices are shared evenly.

"In the current situation, shared effort and all pulling in the same direction are especially important values," he told a conference at the IESE business school in Barcelona today, after referring to a report on executive pay. "I'd ask the companies of the Ibex 35 to be conscious of the situation."

Spaniards, already suffering an unemployment rate of almost 25%, are being asked to accept the deepest austerity measures on record even as the economy contracts in the second recession since 2009. The government's latest round of budget cuts announced last week included a reduction in jobless benefits and an increase in sales tax.

"The exit from difficult situations is easier and quicker when there's a perception that efforts are being shared equitably," said de Guindos, a former Lehman Brothers Holdings Inc. banker and civil-service economist.

The government, run by the pro-business PP, tightened rules in February on the salaries of directors at banks that had received government assistance. The PM also eliminated the year-end bonus for public workers and high-level officials last week as part of his deficit-cutting efforts.

The average pay per board member at companies in Spain's main Ibex 35 stock index rose 5% from a year earlier in 2011, the CNMV markets regulator said in the July 11 report to which de Guindos referred. Average pay per board member climbed 4.4%, according to the report.