Swiss crackdown turns up the global heat on fat cat pay
Voters overwhelmingly in favour of tough controls on rewards for senior managers
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Monday 04 March 2013
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.
- 1 Toddler throws a tantrum at the White House – in front of Barack Obama
- 2 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
- 3 Picture of couple posing with beached dolphin 'that later died' causes outrage
- 4 16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
- 5 Witch doctor arrested after forcing newborn baby to walk in Indian village
Toddler throws a tantrum at the White House – in front of Barack Obama
Maryland mother found pushing her dead child on a swing in a playground
16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
Picture of couple posing with beached dolphin 'that later died' causes outrage
Nicola Sturgeon did want David Cameron to win the general election, report concludes
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...