(BRUSSELS) - EU finance ministers are preparing to adopt joint recommendations to tighten rules on excessive payoffs or 'golden parachutes' for top executives, according to a draft document seen Thursday.

The document, obtained by AFP, says that governments should have their say along with shareholders and social partners in determining pay packages for senior executives.

"National authorities have a role to play in helping to define appropriate guidelines (and) ... encouraging good practices," said the text, which ministers will discuss Tuesday in Luxembourg.

The text also says that remuneration should "correctly and exhaustively" reflect executives' performance, "including as regards departure indemnities (golden parachutes) which should be linked in an appropriate way to an executive's contribution to the success of the company."

It also calls for remuneration systems that encourage the long-term profitability of companies and not incentives focused on short-term profits.

The recommendations are non-binding and each country may legislate as it sees fit on the matter.

The European Commission brought out proposals on executive compensation in 2004 but the measures found next to no interest from member states.

First used in the United States in the 1980s, golden parachutes were designed to attract top-notch chief executives to turn around troubled multinationals and the practice later became widespread in Europe.

French President Nicolas Sarkozy, whose country holds the EU's rotating presidency, has repeatedly said chief executives should not be rewarded with huge sums of money if they fail to keep their companies afloat.

Such payoffs have been in the spotlight in recent days after news that two executives from Dexia bank will receive payoffs after the French, Belgian and Luxembourg governments stepped in with a 6.4-billion-euro rescue package.

Economic and Financial Affairs Council (ECOFIN)

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