59° Good Morning
59° Good Morning

Swiss vote to curb corporate exec pay

Thomas Minder, who began the campaign to give

Thomas Minder, who began the campaign to give Swiss shareholders more say over executives' pay, reacts with delight Sunday as he learns that his proposal, known as the Rip-off Initiative, was approved by Swiss voters. (March 3, 2013) Credit: AP

BERLIN -- Swiss voters voted their anger at perceived corporate greed Sunday by approving a plan to boost shareholders' say on executive pay.

Some 67.9 percent of voters backed what is called the Rip-Off Initiative, with 32.1 percent voting against, according to the official count broadcast 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 last month that the outgoing board chairman of Swiss drugmaker Novartis AG, Daniel Vasella, was to receive a leaving package worth $77 million further fired up public sentiment against fat-cat bosses. Vasella later said he would forego the deal, but by that time the incident had dashed opponents' hopes of stopping the initiative.

"Today's vote is the result of widespread unease among the population at the exorbitant remuneration of certain company bosses," Justice Minister Simonetta Sommaruga told a news conference in the capital Bern hours after polls closed.

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 what is known in Switzerland as golden hellos and goodbyes -- 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 and forcing pension funds to tell their members how they voted at shareholder meetings.

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 3 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.

The Swiss decision comes on the heels of a European Union decision this past 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.

More news