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.


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  • rate this

    Comment number 43.

    What is rarely reported internationally is that a No in this vote (it's an initiative by the way, not a referendum) would in turn have effected a similar, but more sensible law worked out by the government, addressing the same problems but giving the power to shareholders, not the state. This result right now is really just a defiant reaction in light of the recent scandal at Novartis.

  • 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 41.

    HMRC makes a lot of money from these bonuses.
    The risk is from complicated baskets of assets that nobody understands. Ratings agencies earn more from giving an AAA rating so whatever the risk ............
    The gamblers should be made to pay when they fail. The banks use shareholders funds to cover losses and still pay bonuses.
    Maybe, just maybe, the good times are over for the gamblers. Or not.

  • rate this

    Comment number 40.

    Ah the lucky Swiss... It must be nice to live in a democracy!

    Unfortunately we will never see such a thing here as the bankers etc own the government..... and all (ok most) politicians in the 3 main parties...

  • rate this

    Comment number 39.

    Try convincing our government that bankers deserve little or no bonus payments for playing around with our money.............they are all just as greedy for their own pockets.

  • rate this

    Comment number 38.

    If I understand the article, the Swiss haven't voted to allow government interference in what private companies pay their employees - merely to strengthen the position of shareholders... Something that would be a good idea generally as individual shareholders are virtually ignored by company executives.

  • rate this

    Comment number 37.


    As they would say in Switzerland: AUSGEZEICHNET!!!"

    Unless they're in the French or Italian speaking regions of course.

  • rate this

    Comment number 36.

    so if a bank acted responsibily, played no part in the crash and continue to make a profit the government will tell this privately owned institution how much to pay their staff regardless of what the shareholders say ? isnt that communisim .

  • rate this

    Comment number 35.

    Inv bankers are paid a lot because they make huge profits. Not a fan of pure capitalism, but the market should work to bring new players into the market and reduce monopoly profits for a few. This makes transactions cheaper for customers (us), and reduces salaries to normal levels. Govt should work to fix this. Customers attracted to London, good for UK, no need for excess pay.

  • rate this

    Comment number 34.

    @dothemaths #21 please move with them. people like you represent everything that's wrong with the country. greedy beyond belief you are happy to exploit the problems of the nation rather than contribute to the solution. please leave quickly and can you make that a one way ticket? i can't imagine many would want you back here.

  • rate this

    Comment number 33.

    So Dave, which bit of "we're all in it together" does this tie in with.

  • rate this

    Comment number 32.

    UK = Corrupt

  • rate this

    Comment number 31.

    Cameron, Osborne et al say this sort of measure would "drive away talent". What sort of talent? Like the self serving Fred the Shred? Or perhaps the inimitable incompetent Hector Sants? Precisely the sort of talent I would like to see driven away - very far away! One day democracy may take hold in the UK - for time being, it seems elected politicians literally do not care what the citizens think.

  • rate this

    Comment number 30.

    Interesting that it was an executive turned politician that tabled this change in Switzerland. Well at least they have politicians that have got their hands dirty not like ours who are all from Eaton background. Perhaps we should demand an elected pm and chancellor not ones who are self elected.

  • rate this

    Comment number 29.

    If you are going to blame anybody, then blame Alan Greenspan.

  • rate this

    Comment number 28.

    Outside the Marginals

    Perhaps Dave and Boris should take geography lessons from Gove.

    No that won't work they will still be out of touch and lost. Soon they will be out of time. Finished for good now they're split by UKIP.

    But I have to applaud the Swiss for giving the Bankers less room to wriggle and threaten us.

  • rate this

    Comment number 27.

    Love this. Stick your arguments about about competition, the "flight of the bankers" and free markets, we're sick of listening to them. We don't want you getting your bonus. So you're not getting it. You don't like it, then leave. About time we started calling the bluff of these people.

  • rate this

    Comment number 26.

    Do not underestimate the Swiss. The Reformation took off in Switzerland even before Martin Luther nailed his theses to the church doors. Scores of formidable philosophers, politicians and political movements came from, or trace their origins, from Switzerland. I see this as the beginning of the end of the bankers' gluttony.

  • rate this

    Comment number 25.

    The City and the income it generates forms the central plank of Tory financial policy.

    Cameron and Osborne should now be forced to walk it.

  • rate this

    Comment number 24.

    We should adopt this model of democratic process - Immediately !!!


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