A rumpus over executive pay in state-owned Italian companies is prompting the centre-left government of Romano Prodi, prime minister, to consider drastic cuts in how much their managers should earn.

Executives at companies partly or wholly owned by the state would earn no more than €250,000 ($333,000, £169,000) a year, under an amendment to Italy’s 2007 budget, which is in the final stages of winning parliamentary approval.

The move followed an Italian television programme’s disclosure that some chief executives were collecting millions of euros in salaries and severance packages, even though their companies were bleeding public money.

Most attention centred on Giancarlo Cimoli, chief executive of Alitalia, the national airline that lost €1m a day in the first nine months of this year and is famous for mismanagement, labour unrest and flight delays.

It emerged not only that he was Europe’s highest paid airline executive, earning €2.8m last year, but that he would be entitled to a multimillion-euro severance package when he left the airline.

The government intends soon to sell its controlling stake in Alitalia, making it likely that Mr Cimoli, who became chief executive in 2004, will be on his way, too.

Another prominent loss-making entity is Ferrovie dello Stato, the state-owned railway company. Elio Catania, who replaced Mr Cimoli as its chief executive, recently resigned with a multimillion-euro package.

Under an earlier budget amendment, passed by parliament’s lower house, a ceiling of €500,000 was placed on the annual pay of executives at state-owned companies not listed on the stock market.

This covers companies such as Ferrovie dello Stato, the postal services group Poste Italiane, and the television and radio company Rai, but not highly profitable quoted companies such as Eni and Enel, the energy and electricity giants.

The new €250,000 limit is meant to apply to both quoted and non-quoted companies, but it is uncertain how it could be enforced at Eni and Enel, which act in most respects like private sector companies.

“There’s a need to think about this,” said Nicola Sartor, an undersecretary of state at the finance ministry.

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