Swiss citizens vote for tough limits on bosses’ pay

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http://www.todayonline.com/world/europe/exit-polls-swiss-ok-tough-limits-bosses-pay

Swiss citizens have voted to impose some of the world's strictest controls on executive pay, forcing public companies to give shareholders a binding vote on compensation, initial result projections showed.

Mr Claude Longchamp of pollsters Gfs.Bern told Swiss state television early returns in a referendum showed 68 per cent backed plans for shareholders to veto executive pay and for a ban on big rewards for new and departing managers.

Support for the move was fired by anger over the big bonuses blamed for fuelling risky investments that nearly felled Swiss bank UBS, as well as outrage over a proposed US$78 million (S$97 million) payment to outgoing Novartis chairman Daniel Vasella.

Mr Longchamp said the public outcry last month that forced Novartis to cancel Vasella's "golden goodbye" helped drive the campaign.

Mr Thomas Minder, the businessman-turned-politician behind the campaign, says his proposals are aimed at ending a culture of short-termism and rewards for managers of badly-run companies rather than just capping salaries.

Despite threats from some executives, Switzerland is unlikely to see an exodus of big companies, drawn to the country by low taxes, stable politics and business-friendly laws.

SWISS OUTRAGE

Swiss companies accounted for five of the top 10 best-paid chairmen in Europe in 2011, but only the heads of Novartis and Roche made it into the continent's top 10 for chief executives.

While anger at multi-million dollar payouts for executives has spread around the globe since the financial crisis, the Swiss system of direct democracy means populist proposals have a greater chance of implementation.

Swiss citizens get to vote on a range of topics in up to four national referendums each year.

Mr Minder's initiative forces binding votes on compensation every year as well as on board composition and would also ban bonus payments to managers if their companies are taken over.

The plan also includes possible jail sentences and fines for breaching the new rules.

The centre-left Social Democrats are already pushing for another referendum on even tougher curbs on executive pay - they want to limit the annual compensation of top managers to just 12 times that of their lowest-paid worker.