UPDATE 1-France curbs stock options for bailout companies

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By James Mackenzie

PARIS, March 30 (Reuters) - French banks and carmakers that have benefited from government bailouts in the economic crisis will have to scrap stock option grants until at least the end of next year, Prime Minister Francois Fillon said on Monday.

The measures are being rushed in in the face of a wave of public anger over management pay, fuelled by a series of cases where fat bonuses were put aside for executives in companies that rely on support from the taxpayer.

The government is issuing a special decree that comes into effect on Tuesday without the need for the parliamentary debate that would be needed for standard legislation.

Fillon said France's six big banks -- Societe Generale (SOGN.PA), BNP Paribas (BNPP.PA), Credit Agricole (CAGR.PA), Banques Populaires, Caisses d'Epargne (CNAT.PA) and Credit Mutuel -- and its carmakers Renault (RENA.PA) et PSA (PEUP.PA) would be affected.

"For these companies, extra restrictions beyond those of common law rules are necessary," he told reporters.

"Their managers will have to do without stock options and also accept that the variable and exceptional elements in their pay are strictly regulated," he said.

The decree will ban stock options and stock grants to companies receiving state support and will regulate variable elements in executive packages by banning bonuses that are not linked to set targets and preventing targets from being linked to a company's share price.

It will also prevent management bonuses being paid in groups where there have been heavy staff layoffs and it would force boards to reveal their decisions on bonus payments.

PRESSURE

With jobless numbers climbing rapidly past the 2 million level and demonstrations against the government's handling of the crisis bringing up to 3 million protesters onto the streets this month, the pressure for action has been growing.

President Nicolas Sarkozy pledged 10.5 billion euros ($13.90 billion) to help France's banks through the financial crisis and offered 3 billion euros in loans to Peugeot Citroen and Renault in exchange for guarantees on jobs.

He led the outrage earlier this month after it emerged that Societe Generale executives had been awarded hundreds of thousands of stock options despite having recently received state funding.

Popular anger was whipped up further by the case of ailing car parts maker Valeo (VLOF.PA), whose outgoing chief executive was awarded a 3.2 million euro "golden parachute".

Economy Minister Christine Lagarde said the measures would remain in force until the end of 2010, in the expectation that the recession that has affected banks and carmakers across the world would have eased by then.

"We hope that our economy and other economies will get out of this in 2010," she told reporters after signing a convention on the measures with leaders of the banks concerned.

"This is an exceptional measure that the government is using to react with exceptional speed and reactiveness and it's obviously not intended to be lasting, any more than the state guarantees themselves are," she said. ($1=.7560 Euro) (Reporting by James Mackenzie; editing by Tim Pearce)