‘Unease’ as Switzerland moves to cap bankers’ bonuses

67.9% of Swiss voted in favour of the radical legislation Geneva – Arabstoday A large majority of Swiss voted on Sunday to rein in executive pay and force business leaders to give up golden parachutes, according to final results of the popular vote. A full 67.9 percent of those who voted came out in favour of the initiative, which passed in every single one of Switzerland's 26 cantons, the federal chancellory said, adding that 46 percent of eligible voters had cast their ballots, AFP has reported.
The man behind the so-called Minder Initiative, businessman and senator Thomas Minder, said he was not surprised it passed.
"The people have decided to send a strong signal to boards, the Federal Council (Swiss government) and the parliament," Minder himself told public broadcaster RTS.
Swiss Justice and Police Minister Simonetta Sommaruga hailed the result, which she told reporters was "the expression of widespread unease in the Swiss population about the level of salaries paid to top managers."
While Switzerland has avoided the level of economic crisis seen in the European Union, which surrounds the Alpine nation, public anger has risen there as elsewhere over what is deemed abusive levels of pay and bonuses for top bosses.
The draft law set down by the Minder initiative -- one of several initiatives voted on at both national and local levels Sunday -- only covers Swiss companies listed on Swiss or foreign stock exchanges.
It will limit the mandate of board members to one year, and will ban certain kinds of compensation, including the so-called golden handshakes or golden parachutes given to executives when they leave a company.
In addition, it will ban the bonuses received for takeovers, or when a company sells off part of its business.
Anyone who does not follow the rules could face up to three years behind bars and fines amounting to up to six years of their salary, according to the text.
Switzerland's main employer's association, Economiesuisse, which has fought the initiative tooth and nail, lamented its passage, insisting "the emotional debate" had blocked "a facts-based discussion about the content of the initiative."
Outrage mounted last month when information leaked out about a planned golden parachute for Daniel Vasella, former head of pharmaceuticals giant Novartis.
Vasella, who made 15 million Swiss francs ($16m) in 2011, was to be paid 72 million Swiss francs extra over six years, provided he did not go to work for the competition, after stepping down this February.
The deal sparked uproar, and despite Novartis's subsequent announcement that Vasella, at the helm since 1996, would forgo the sum, he has remained the unwilling poster boy for the referendum campaigners.
Sums made by counterparts from other companies have also been spotlighted, including the 12.5 million Swiss francs for Severin Schwan, boss of pharmaceutical powerhouse Roche, the 11.2 million of food giant Nestle's Paul Bulcke, and the 10 million of Ernst Tanner, leader of chocolate group Lindt.
For Minder, the massive sums on the table show that company boards have lost control of pay.
The solution, he argues, is to give the general assembly of shareholders the power to approve all compensation packages to board members and the company leadership.
The Swiss government and the upper house of parliament have come out against the initiative, cautioning that some large companies might decide to move their headquarters out of the country.
Minder rejected that argument Sunday.
"It is a great advantage for investors," he told RTS, suggesting that instead of chasing companies away, such a law would entice investors to set up companies in Switzerland.
In a bid to derail the Minder text, the parliament made a counter-initiative that is seen as less far-reaching, simply setting a requirement for shareholders to be consulted over pay and providing exceptions to the ban on golden parachutes.
If the Minder initiative passes, the government will draw up a proposed law to be reviewed by parliament, before it can be passed into law -- something that usually takes more than a year.
However, if the bill fails to win a parliamentary majority, the counter-proposal would become law directly.
The phenomenon of golden parachutes appeared in the United States in the 1980s in a bid to attract the best possible leaders to help turn around struggling multi-nationals.
According to US unions AFL-CIO, the pay of chief executives in that country swelled from 42 times the average blue-collar worker's pay in 1980 to 380 times the average worker's pay in 2011.
European companies have gradually followed suit, and massive executive compensation packages have increasingly sparked outrage across the continent.
Four years into its financial crisis, the European Union is preparing to require banks to cap bankers' bonuses, while the Dutch government is preparing a bill that would cap golden parachutes in that country at 75,000 euros.
In France, the socialist government has meanwhile has capped top executive pay in the public sector at no more than 20 times the wage of the lowest-paid employee.