Swiss citizens voted yesterday 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.
Claude Longchamp of pollsters Gfs.Bern told Swiss state television that early returns in a referendum revealed that 68% backed plans for a shareholder veto on executive pay and for a ban on big rewards for new and departing managers.
The clear majority was unusual given fierce opposition and intense campaigning by business lobby group Economiesuisse, which warned that the proposals will damage the country’s competitiveness and scare away international talent.
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 $78m (€59.9m) payment to outgoing Novartis chairman Daniel Vasella.
Longchamp said the public outcry last month that forced Novartis to cancel Vasella’s “golden goodbye” helped drive the campaign.
“It emotionalised and it mobilised,” he said.
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.
And companies will seek ways around the new rules to reward executives, just as banks in Europe are looking to soften the impact of a cap on bonuses for top staff, agreed by European politicians on Thursday.
“If a company wants to pay a top executive 25 million, then they will find a way to do so regardless of the initiative,” Rolf Soiron, chairman of cement maker Holcim and drugs industry supplier Lonza, told Reuters before the vote.
Experts are also questioning whether shareholders in Swiss companies will make full use of their new rights.
Of the top 100 Swiss companies, 49 already give shareholders a non- binding vote on the pay of executives. But while opposition to pay deals is on the rise, a majority of investors have never voted them down.
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