Swiss Reject Measure to Curb Executive Pay

[Eugene]

Source: New York Times

By JACK EWING
Published: November 24, 2013

FRANKFURT — Swiss voters rejected severe limits on executive pay Sunday in a ballot that nonetheless illustrated rising popular resentment toward corporate excess in one of Europe’s most business-friendly countries.

The measure, known as the 1:12 initiative because it would have barred executives from earning more than 12 times as much as the lowest-paid employees at their companies, was rejected decisively by 65 percent of voters, according to estimates Sunday by Gfs.bern, a Swiss polling firm.

While opinion polls showed widespread dismay about huge executive paychecks, many Swiss were uncomfortable with a rigid, government-imposed salary cap. Switzerland traditionally imposes light regulation on business compared to the rest of Europe, as well as relatively low income taxes. Partly as a result, the country is a popular base not only for banks and hedge funds, which have congregated in Geneva, but also major chemical, pharmaceutical and machinery companies.

An outright salary cap was considered too extreme for most voters, said Daniel Kübler, an associate professor of political science at Zurich University. “People have concerns about the way modern capitalism works, but they still prefer a free-market economy,” Mr. Kübler said.

[font size=1]-snip-[/font]


Read more: http://www.nytimes.com/2013/11/25/business/swiss-reject-measure-to-curb-executive-pay.html

[pampango]

1. Too bad the referendum was defeated but it raised public awareness.

Although the referendum was defeated, voter dismay at the behavior of some Swiss corporations and executives is widespread. Proponents of the initiative complained that companies like the Swiss banking giant UBS, which received a government bailout because of the financial crisis, continued to pay huge executive bonuses even when they performed poorly.

Supporters of the 1:12 initiative conceded defeat Sunday but said they had succeeded in raising public awareness about the issue.

“In the future, C.E.O.'s and boards of directors are going to have to think very carefully about how they justify multimillion-franc compensation,” the Swiss Social Democratic Party, which had supported the initiative, said.

Switzerland also has a long history of social equality, and many citizens were offended by high-profile cases like that of Daniel Vasella, the former chief executive of the pharmaceutical company Novartis, who early this year demanded a $78 million severance package in return for a promise not to share his know-how with any competitors. In the face of a public outcry, Mr. Vasella withdrew the demand and has since retired.

[seabeckind]

2. I think the number was much to low to start

especially when facing a media blitz. Got to get past the bouncer before you can dance.

[grahamhgreen]

4. Good effort:)

[cstanleytech]

5. Hmmm they should consider addressing the gap via the tax system then if they cant get a cap passed.

Bigger the gap the higher the corporate tax a company pays, smaller the gap the smaller the tax.

[BlueMTexpat]

6. This was not the beginning of the story, nor will it be the end.

Here's what SwissInfo has to say: http://www.swissinfo.ch/eng/swiss_news/Salary_limit_judged_too_extreme_by_voters.html?cid=37401508

For Der Bund in Bern, the fear of economic damage was stronger than the desire for justice. “Anger over wage orgies in boardrooms has not dissipated. Only if the majority of voters feel that the business world is not abusing its freedom will they be prepared to reject leftwing regulation and rightwing isolationism.”

The Neue Luzerner Zeitung believed that unlike the so-called fat cat initiative – backed by 68 per cent of voters in March and which gives shareholders a veto over top manager payments – “the business world this time managed to get its arguments across”.

“Despite its defeat, the leftwing will continue its march against the liberal economic system,” it continued. “The parties on the other side can merely breathe a sigh of relief for the time being.”

and

As the Tages-Anzeiger pointed out, “every third voter in this relatively liberal country wanted a wage cap to be fixed by the state. The initiative’s opponents can’t simply blow off demands for a fairer distribution of wages”.