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 63.

    I've always thought the cockneys had it right,they are a bunch of merchant bankers.

  • rate this

    Comment number 62.

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

    Question-What's the difference between Swiss & British government?

    Answer- Swiss government does what people the electorate want rather than what politicians & big business wants.

    Remember that Dave at the next general election!

  • rate this

    Comment number 61.

    @42 You seem to not read the article where one of the main points of the proposal is to give shareholders the legal right to veto a bonus whereas in the present system compensation boards decide on bonuses and shareholders can go whistle.

  • rate this

    Comment number 60.

    As "we, the taxpayers" own 81% of RBS, our appointed administrators (The Government) should be compelled to ask US to authorise any payments to the execs....
    I think we all know what the answer would be ?
    (and when are we going to getFULL RETURN of our money -with interest?)

  • rate this

    Comment number 59.

    Switzerland is a different country from us.

    They have had variations of Direct Democracy for at least 150 years.

    This makes them more stable and more democratic than the pantomime we endure.

    Let's hope Beppe - once the BBC actually mention him - will inspire some figurehead over here to actually begin democracy

    We've not experienced it since gatherer/hunters enjoyed their freedoms.

  • rate this

    Comment number 58.

    If I understand this correctly the Swiss are not restricting how much companies pay their executives they are giving that power to shareholders. In many successful economies, eg Germany, Works Councils have a role in decision making. In Britain the problem is that there is a self interested club setting each others pay. They are conning the shareholders, customers, government and workers equally.

  • rate this

    Comment number 57.

    If everybody apart from us introduced such limits, we could have the best paid bankers in the world - and surely the best talent to be found anywhere. They would do as they pleased and we would all be better off. Isn't that the argument?

  • rate this

    Comment number 56.

    Hurray for the Swiss! It's simply awesome to see democracy at work. It's like getting a glimpse of God. People are still furious that we were forced to bail out with our hard earned tax money the richest people on earth, and then read about soaring profits and bonuses. Why should we pay for someone else's Rolls. The Geithners of our world should have been charged with treason and they still may.

  • Comment number 55.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 54.

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

    RUBBISH! Do people REALLY think that a corporation would lose out on a multi-billion £ market in the UK just because they're forced to actually pay themselves a fair wage, or pay their taxes?! Utter tripe! And it shows why we cannot trust our government to look after the people of this country

  • rate this

    Comment number 53.

    when EU directives like this one are enforced, we in the UK will realize we killed the golden cow, banking, provider of a third of UK tax revenue. we'll realize what fools we were not see that these measures are simply a swing at London, because Europe continues to be jelous of our finacial services sector and what better way to harm it than this. without that tax base, we're doomed.

  • rate this

    Comment number 52.

    I'm not sure what business it is of voters what a CEO is paid (excluding the bailed out banks of course)

  • 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 50.

    This is a difficult decision.
    I'm not a communist/socialist, neither am I a capitalist. I believe in a mix ... rather like eating in a healthy way. But, for me, Ken Loach hit the nail on the head on Question Time. Saying that rather than trying to 'control' banks, it was time for a completely different system - a 'financial revolution'.
    Sometimes if it is broken you have to start something new.

  • rate this

    Comment number 49.

    You can trust the Swiss to be pretty sensible on issues like this.

  • rate this

    Comment number 48.

    37.Rufus McDufus

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


    Or the Romanche-speaking ones, come to that...

  • rate this

    Comment number 47.

    So all this talk of bankers fleeing to Zurich was a load of horsemeat then...

  • rate this

    Comment number 46.

    No recession in Hong Kong, and only 15 per cent income tax. Seems to be a nice place too. No recession in Australia either, although its a bit expensive there nowadays, but when you are making the money who cares about that. Meanwhile we head toward a triple dip. I was jumped on by all and sundry on here when I predicted the double dip. Meanwhile the fiddling Nero complex pervades here.

  • rate this

    Comment number 45.

    In essence banking is simple. Somewhere for us to keep our money (invest) and somewhere we can borrow money from. And yet banks fail on both these simple tasks!
    And they get paid how much?!
    I'm sure some bankers have a social/moral make it better or get out - most bankers cannot be proud.

  • rate this

    Comment number 44.

    It is already extended to us via wages freeze/cuts, budget cuts, council cuts, price inflation, energy costs, fuel costs, food costs, welfare cuts, defence cuts etc ad nauseum. As for the contribution of these 'geniuses' to the economy, I presume you are referring to their status as the biggest recipients of social welfare on the planet. What else have they done recently?


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