A Swiss businessman embarked on an eight year crusade against excessive executive pay and – days after the EU approved measures to cap bankers’ bonuses – Switzerland voted to adopt Thomas Minder’s proposals for constitutional limits on remuneration.
His “fat cat initiative” called for a ban on golden hellos, gilded goodbyes and incentives for completing merger transactions. It limits directors’ mandates to one year, restricts their right to hold posts outside the company and gives shareholders an annual binding vote on pay. Failure to comply with any of these and other conditions would be a criminal offence meriting up to three years in jail.
The Financial Times reports that critics say companies would pack up and move to more lenient climes and the country’s ‘enviable competitiveness’ would be badly damaged but others think that Switzerland’s attractive corporate tax rates and good infrastructure will avoid such an exodus.
The Swiss public is mindful of recent excesses, in particular the attempt to bestow a lavish $78 million gag on Novartis’s outgoing boss, Daniel Vasella; even before the referendum, the biggest companies improved transparency and cut chief executive pay.
Thomas Minder’s initiative against “fat cats” was backed by 67.9% of the voters and all 26 Swiss cantons the government said on its website. The turnout was 46%, a Bloomberg article reported. It will now be written into the Swiss constitution and apply to all Swiss companies listed on Switzerland’s stock exchange.