Swiss referendum backs executive pay curbs

Daniel Vasella, chairman of Swiss drugmaker Novartis There was outrage in Switzerland over a $78m pay off, later scrapped, to the outgoing Novartis chairman

Swiss voters have overwhelmingly backed proposals to impose some of the world's strictest controls on executive pay, final referendum results show.

Nearly 68% of the voters supported plans to give shareholders a veto on compensation and ban big payouts for new and departing managers.

Business groups argued the proposals would damage Swiss competitiveness.

But analysts say ordinary Swiss are concerned about a growing economic divide in the country.

The vote came just days after the EU approved measures to cap bankers' bonuses.

'Fat cat initiative'

The final results showed that all 26 Swiss cantons backed the proposals.

In all, 1.6 million voters said "Yes" against 762,000, who rejected the idea.

The BBC's Imogen Foulkes, in Berne, says multibillion dollar losses by Swiss banking giant UBS, and thousands of redundancies at pharmaceutical company Novartis, have caused anger in Switzerland - because high salaries and bonuses for managers continued unchanged.

The new measures will give Switzerland some of the world's strictest corporate rules, our correspondent adds.

Start Quote

We had the support of the people of Switzerland because you know not everybody in Switzerland is rich”

End Quote Brigitte Moser Harder Referendum organiser

Shareholders will have a veto over salaries, golden handshakes will be forbidden, and managers of companies who flout the rules could face prison.

The "fat cat initiative", as it has been called, will be written into the Swiss constitution and apply to all Swiss companies listed on Switzerland's stock exchange.

Support for the plans - brain child of Swiss businessman turned politician Thomas Minder - has been fuelled by a series of perceived disasters for major Swiss companies, coupled with salaries and bonuses staying high.

Our correspondent says the main example is banking giant UBS, which wrote off billions in the wake of the 2007 sub-prime mortgage crisis, and then had to be bailed out by the Swiss government.

A further incident came in February when it was announced that the outgoing chairman Novartis', Daniel Vasella, would be receiving a 72m Swiss francs (£51m; $78m) "non-compete" pay off over six years, designed to stop him working for other related industries.

The payment was later scrapped, but it provoked anger and amazement in Switzerland, because his salary had been regarded as too high and the firm had been cutting jobs, our correspondent adds.

One of the organisers of the referendum, Brigitte Moser Harder, told the BBC she thought the Swiss people agreed with the proposals because the gap between rich and poor had become wider.

"From the beginning, 2006, we had the support of the people of Switzerland because you know not everybody in Switzerland is rich.

"It's also a social problem because the high wages got higher and the small ones sometimes just got lower. I think people have the support of the Swiss people because of that."

Meanwhile, under an EU deal agreed last week by the bloc's 27 nations, bonuses will be capped at a year's salary, but can rise to two year's pay if there is explicit approval from shareholders.

The UK argued the EU bonus rules would drive away talent and restrict growth in the financial sector.


More on This Story


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 51.

    Lets face it - we (the UK) need the money, so...

    1. Let them award whatever bonuses they like
    2. Bonuses should be cash only (no shares)
    3. Bonuses taxed at flat 40% rate AT SOURCE - but no workarounds or offsets of any sort allowed.

    Caps on bonuses will NOT stop people taking mad risks.

    So, make the UK attractive to the banks and then make sure we get the tax revenue.

  • rate this

    Comment number 42.

    I think businesses would be quite entitled to tell "The people" where to stick their referendum. It's nothing to do with anyone else how much a privately owned company how much it pays it's staff.

    People always seem to forget that the sole purpose of a company is to make money for it's shareholders anything else along the way is just coincidental. And that includes creative accounting on tax

  • rate this

    Comment number 22.

    Note - the Swiss had a referendum on the issue. Low turnouts at UK elections are due to voters having no real choice between which set of 'posh boys' are in power.
    I'd bet that if we had a referendum on curbing fat cat bonuses turnouts would be high & the result would be the same. Interesting to note that even in wealthy Switzerland people are concerned about widening social divides.

  • rate this

    Comment number 20.

    hooray, common sense at last..its always amazed me that bankers get big bonuses for failure..i.e. massive losses, when any other business it would mean the sack. and a raspberry to those who bleat that bankers would run away to zurich..well let them, maybe new blood can do better.

  • rate this

    Comment number 15.

    Nice to see some countries don't have to be forced kicking and screaming by the EU to do the right thing...


Comments 5 of 6


More Europe stories



Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.