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 503.

    "Nearly 68% of the voters supported plans to give shareholders a veto on compensation ...."

    But shareholders already have this.

    What's new here?

  • rate this

    Comment number 502.

    I personally am against ludicrous salaries and bonuses. But the fact that a Swiss referendum has produced a vote in favour of curbing them, is no prove the curbs will actually have a beneficial effect. Which is the conclusion a lot of posters here seem to have drawn. This only proves it's electoral popularity, not necessarily it's effectiveness... I'm afraid the jury is still out on that one!

  • rate this

    Comment number 501.

    492. Sorry but the main cause of the current worldwide depression was banks acting like casinos using a fixed deck of cards, in the chase for bigger short term profit and massive wage hikes for the privileged few. Now the taxpayer has had to bail them out and they still behave as they always did. Enough is enough.

  • rate this

    Comment number 500.

    Can someone help me please?
    This old chestnut "the UK cant afford to loose X % of our financial industry"!?
    Well,I assume a large % of the Swiss GDP is related to the financial industry or domicile for tax avoidance!?
    What is our % in comparison to the Swiss?

  • rate this

    Comment number 499.

    Fears that a company will lose its competitive edge because it doesn't pay its executives the market equivalent are groundless, and spread by the very people greedy for bigger bonuses. It's time companies grew their leaders organically, instead of buying them in, so that business knowledge levels is acquired through hands-on-the-job. Most executives have no idea what goes on at branch level.

  • rate this

    Comment number 498.

    Let's follow their example, start £50K max for council leaders - even that is more than they are worth.

  • rate this

    Comment number 497.

    Am always surprised at the level of civic responsibility displayed in European countries, we just don't have it here, at best we have nimbyism and when any major project is announced, we say no, e.g. the sewer project in London, the high speed rail system to Birmingham and beyond. We taxpayers have forked out billions, our national debt is huge, but hey let the bankers earn on ....

  • rate this

    Comment number 496.

    Exec VP of Silverwoman sucks " AH, De Vere do come in. I'm afraid the bank can't pay you a bonus this year,but we will raise you salary and b your watch for £2 million"

  • rate this

    Comment number 495.

    The shape of things to come? I hope so, then perhaps UK Companies see that they have a wider responsibility to the society they exist within.
    Ask yourself, it is acceptable that UK companies export jobs to china/india just so they can make a few extra quid, after all its the UK tax payer that picks up the tab in increased benefits and lower tax revenue

  • rate this

    Comment number 494.

    With Fords Viscous anti- union stance, you can in no way portray them as a caring welfare capitalist employer
    I'm advocating wc not HF, try
    "Fred's idea was 'welfare capitalism', designed to improve the lot of workers and especially to reduce the heavy turnover that had many departments hiring 300 men per yr to fill 100 slots. Efficiency meant hiring and keeping the best workers"

  • rate this

    Comment number 493.

    This isn't communism...this is about preventing executives who have not invested money or effort in building s company up from ganging together to pay themselves too much. Especially when they fail to deliver shareholder returns or work in a fixed or cartel market. And not just pay, bonuses too. The award of bonuses to RBS executives who work in a loss making company is wrong.

  • rate this

    Comment number 492.

    We all like to blame the banks for our problems especially the politicians. The current economic crisis is not down to bankers bonuses but decades of poor governance,excessive borrowing& politicians setting up an ever growing welfare state. Yes banks did fail but our politicians did nothing to stop it. We all borrowed and spent so we shold our selves and politicians to account as well

  • rate this

    Comment number 491.

    @51 are you George Osborne?

  • rate this

    Comment number 490.

    We should have more of a right to do this for politicians. They also do lousy jobs. So we, who they are supposed to be working for, should decide if they should get a pay rise. As for the bankers... I've yet to see a true expert in this field, otherwise we would not all be in this mess. You should only receive a bonus when you do an exceptional job. Not happened in over a decade, methinks...

  • rate this

    Comment number 489.

    Everyone should start a boycott list, get one running on facebook or something with a list of all these companies who have obscene pay and people choose to 'like' the ones they want to boycott.

    I already boycott, Coca Cola, Nestle, Cadbury's, Nike, McDonalds, Starbucks, Tesco, BP to name just a few and the day RBS goes back into private ownership is the day I close my account.

  • rate this

    Comment number 488.

    What a fantastic victory for common sense. Democracy enforced within companies through overwhelming public support for it.

    Wouldn't it be nice if even one of our elected representatives had the will to sponsor a private members Bill in Parliament to give us some of the same.

  • rate this

    Comment number 487.

    Hum, if it's good enough for the Swiss perhaps it is time that we the British Public get a referendum on executive pay, can’t see it happening though; it would mean that our government might have to do something that’s going to hurt their party funding.

  • rate this

    Comment number 486.

    Rob a bank go to prison but if a bank robs the people they get a bonus yet DC and boris think it's wrong to cut bonuses

  • rate this

    Comment number 485.

    A very important step forward towards the eradication of such an unjust, immoral and a demotivating bonus system. Very few employees considered as "stars and elite workers" fill their pockets, very often at the expense of their colleagues, whilst the majority get peanuts or worst still redundancies. GREED IS NOT GOOD. The EU once more is a beacon of hope. The Swiss have woken up. And others ?

  • rate this

    Comment number 484.

    So, the Swiss are imposing a Fat Cat Initiative to control big payout executive pay?
    What a shame that the UK has the pussies that are Cameron and Osborne.


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