Swiss vote 'to crack down on excessive pay'
A plan to limit pay to executives based in Switzerland is expected to be passed today, as people vote on the referendum against “rip-offs” remuneration.
Novartis' outgoing chairman Daniel Vasella has long been a lightning rod for criticism of executive pay in Switzerland. Photo: Reuters
By Louisa Peacock 2:59PM GMT 02 Mar 2013
Under the proposal, shareholders will be given the right to hold a binding vote on executive remuneration. Companies would also no longer be able to pay so-called “golden hellos” and “golden parachutes”, whereby senior managers receive a one-time cash lump sum, often running into millions of pounds, when joining or leaving a company.
Polls show the majority of Swiss plan to vote “yes” in the referendum, despite businesses warning it will drive out companies from the country. The move will also be a blow to the many foreign firms that have moved their headquarters to Switzerland in recent years to benefit from better tax deals, including from Britain.
The Swiss vote comes after Vince Cable, the UK business secretary, pushed through plans to give shareholders a greater say over executives’ pay, including a binding vote on remuneration, last year. The UK measures are due to take effect from October as part of an effort to boost transparency and curb compensation levels when the performance of the business does not warrant it.
Elsewhere in Europe, countries such as the Netherlands and Denmark already have similar legislation allowing shareholders at least a binding vote on executive compensation. The Swiss proposal has divided business groups, politicians and unions in the country, with some warning the crack down will damage competitiveness and endanger jobs.
But public opinion towards executive pay is still shaped by anger bankers’ bonuses. Last month pharmaceutical giant, Novartis, scrapped a planned 72m Swiss franc (£50m) payout to outgoing chairman, Daniel Vasella, following mounting anger against his remuneration.
The idea that shareholders should have a strong say in their company’s affairs chimes with Switzerland’s tradition of direct democracy.
Voters in the country who collect 100,000 signatures can force a binding referendum on any issue. The Swiss pay vote is the brainchild of Thomas Minder, a Swiss policymaker and businessman, who put together a petition calling for a pay referendum on the “rip-off initiative”.
His petition blames highly-paid “fat cats” for the financial crisis.
