The Swiss rein in their bosses' pay

Initiator of the "Rip-off Initiative" Thomas Minder reacts as he follows the results of a vote at a hotel in Schaffhausen, Switzerland, Sunday, March 3, 2013. / AP Photo

BERLIN Swiss voters voiced their anger at perceived corporate excesses Sunday by approving measures to boost shareholders' say on executive pay.

Some 68 percent of voters backed the "Rip-Off Initiative," with 32 against, according to projections by Swiss public television station SRF.

The outcome of the referendum was considered a foregone conclusion after opinion polls in recent months showed strong public support for the initiative. News that the outgoing board chairman of Swiss drug maker Novartis AG, Daniel Vasella, was due to receive a leaving package worth 72 million Swiss francs ($77 million) fired up public sentiment against "fat cat" bosses.

Swiss lawmakers will now have to draft a law giving shareholders the right to hold a binding vote on all compensation for company executives and directors. The law will also ban "golden hellos" and "goodbyes" — one-off bonuses that senior managers sometimes receive when joining or leaving a company.

It also promotes greater corporate transparency, for example by requiring that all loans to executives be declared to shareholders.

The measure targets all Swiss-based companies as long as their shares are publicly traded. Breaching the rules could lead to a fine of up to six annual salaries and up to three years in prison.

"It's a powerful signal," said Thomas Minder, an independent lawmaker and businessman who was one of the main forces behind the Rip-Off Initiative.

Opponents conceded that their efforts to warn voters of the possible risks to the Swiss economy had failed.

"We will respect the will of the people," said Pascal Gentinetta, chairman of the powerful business lobby group economiesuisse.

But Christa Markwalder, a lawmaker with the pro-business Free Democratic Party, said foreign firms could now think twice about moving their headquarters to Switzerland, which has attracted firms such as oil rig owner Transocean Ltd., fire and safety company Tyco International Ltd., and a bakery conglomerate Aryzta AG thanks to its comparatively low taxes and light-touch regulation.

In Europe, some other countries such as the Netherlands and Denmark already have similar legislation allowing shareholders at least a binding vote on executive compensation. But in the U.S. and Britain such "say-on-pay" votes are non-binding.

The Swiss decision comes on the heels of a European Union decision this week to cap bankers' bonuses at one year's base salary except in the case of overwhelming shareholder approval.

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.

[realitycheck212]

This is such a wonderful step in the right direction ! The movement starts TODAY ! I urge everyone to contact their friends and relatives to encourage them to get involved in an effort to pass laws that give US citizens the same rights. The pay structure of CEO's and boards of directors are grossly out of line. It's time for American citizens to fight back.

And while we're at it, how about tariffs, so we can bring jobs back to our country. The corporations have 'shipped' the jobs over our borders, it's time American citizens fought back.

Get going !

[a_european]

Some seem to be confused here.

This vote follows an initiative where 100'000 valid support signatures had to be collected in order to enforce the vote.

In this very case, 68% of the voters expressed their will against the Swiss government recommendations.

That's what I'd call real democracy, wouldn't you?

[BCSBUDDY]

Let's look at pro sports figures also. How about movie stars? If we want to limit salaries, let's limit them all. Get ready USA, the limit to CEO's salaries is just around the corner. Obama's socialist agenda is becoming reality.

[retmw1]

CEO's seem to do a good job of limiting their employee's salaries, it's about time someone put limits on theirs. Especially when they cut employee's salaries and benefits then increase their own.

[klfullernd]

That's great. Now the Swiss government needs to work to enforce bilateral child support treaties. My 9 year old son's dad sits in that same town, and has contributed nothing towards him for over 2 years. Seems the "enforcement agency" in Berne does nothing, despite New York state asking for his contribution for 3 years now.

[mentalist65]

Why can't that happen here (sigh).

[lami987]

It is only right for share holders to determine how much their CEOs are paid. I hope it'll happen here and soon.

[a_european]

SNOOPKK
You seem completely confused. That vote expresses in reality the will of the people who decided AGAINST the Swiss government recommendation. This is real democracy example, unfortunately far away from what you are experimenting in your own country.

[piBen11]

Quiet the contrary, most shareholders, be them highly educated or otherwise, in most cases don't care to return their votes to effect any changes in the organizations. Not that such shareholders don't care but they often think it is a waste of time or the time of the receipt of such voting notice is not convenient enough. In short, in most corporations, most of the board members are not necessarily elected by the investors, but appointed by the executives with the tacit knowledge of some activist investors. Thus, it should not be a suprise to see the board working in tandem with the executives to exploit the investors. Afterall, the prevailing cronism between the board members and the executives is "watch my back and I yours." How in this situation do you expect investors to come out on top? When the board is in cohort with the executives for their respective compensations.
The only reasonable approach is the government to intercede on behalf of investors, afterall, the government is the ultimate protector of the rights of all of us. This is the reason in my opinion, this action taken by the Swiss is proper and should be copied by all governments.

[LarryMoniz]

Fascinating attitude that I don't recall EVER hearing from a Senator or U.S. Representative: "We will respect the will of the people," said Pascal Gentinetta, chairman of the powerful business lobby group economiesuisse.

[rzarc2]

Beaner96 replies:
This is nothing more than an attempt at wealth redistribution!
--------------------------------------------------------------
What in HELL do you think has been going on for over 30 years? Everything has gone to the investor class and it came from the working class.

[Beaner96]

Every successful person earned their money from somewhere.

Penalizing someone for their success is unAmerican! Passing laws that take money from one group and distributes it to another is wealth redistribution!

Earning money over a period of time is not wealth redistribution!

[retmw1]

beaner

What success? How many have ran their companies into the ground and walked away with millions. The only ones that lost were the shareholders and employee's of those companies.

[vernique3]

Swiss government represents the people and American government represents corporations. When government is controlled by special interest, it is no longer a democracy but an oligarchy. .

[Beaner96]

Nonsense!

[rzarc2]

Mussolini called it a fascist nation. He would know.

[robert1129]

I love it. I wish we could do the same in the USA.

[Beaner96]

Demand the end to free-enterprise?

That will never happen in America!