The growing global revolt against excessive executive pay boiled over in Switzerland yesterday, with voters endorsing a plan to impose strict controls on how much bosses of public companies can earn, and public outrage now set to translate into concrete action against big rewards for senior managers.
The financial crisis and subsequent questions over misaligned incentives in the banking sector and beyond, where bosses often got away with pocketing millions in compensation despite driving businesses into the ground, have led to calls for a widespread crackdown on excessive pay.
While the Securities and Exchange Commission, the US market regulator, has introduced advisory shareholders votes on executive compensation, the new Swiss controls will be far stricter. In the UK, Vince Cable, the Liberal Democrat Business Secretary, has pushed through measures that would give shareholders a greater say over executive compensation, including binding votes.
They are expected come into effect later this year. Last week, the EU backed a plan to cap bankers' bonuses at no more than a year's salary.
The Swiss proposals, which will need to be turned into law by Parliament, received widespread support, with all of the country's 26 cantons backing the plans. Early returns showed nearly 68 per cent had backed the measures.
Under the proposals, companies will face annual binding votes on compensation, bans on golden hellos and golden goodbyes, where new and departing executives receive large lump sums, and limits on directors' terms.
The plan, put together by the Swiss entrepreneur and parliamentarian Thomas Minder, has been vehemently opposed by the Swiss business lobby, which has warned on its impact on industry. Breaches of the Minder plan could trigger jail sentences.
"This is a clear sign of the distance between the people and the political and business establishment," Mr Minder said, according to Reuters.
But public anger has been building up thanks to high-profile examples of what many considered too-generous packages for company bosses. Novartis, the Swiss pharmaceuticals giant, agreed to pay $78m (£52m) to its departing chairman, Daniel Vasella, triggering an outpouring of popular and political anger.
Novartis abandoned the plan in the end, saying Mr Vasella would instead receive "fair market compensation" over a number of years, subject to certain conditions. Mr Vasella said: "I have understood that many people in Switzerland find the amount of the compensation linked to the non-compete agreement unreasonably high, despite the fact I had announce my intention to make the net amount available for philanthropic activities."
Last year, more than a third of shareholders in UBS, the swiss banking giant that needed a government bailout during the financial crisis, voted against its executive pay plans.