More than two thirds of Swiss voters have backed the world’s toughest limits on executive pay in a national referendum that could increase the powers of shareholders and prevent the large so-called golden handshakes and golden parachutes for incoming and outgoing CEOs.
Almost 68 percent of voters cast their ballots in favor of proposals that that would grant shareholders a right to veto executive compensation plans and prohibit large bonuses for chief executives when newly hired or when exiting the company, according to the Swiss government’s website. The measures are set to take effect as soon as the government draws up corresponding regulations.
About 46 percent of the voters in the nation of almost 8 mn people turned out for the vote, with a turnout of 47 percent in Zurich, the banking capital, where 70 percent of voters (285,000 people) are in favor of the measures, according to national government statistics. The Swiss government and the Senate opposed the measures, warning that large companies would flee the country to avoid the new regulations.
All 26 cantons in the country voted in favor of the proposal, with support for the proposals reaching as high as 77.1 percent in the canton of Jura. The lowest level of support for the measures was recorded in the canton of Obwalden, where 56.1 percent of voters backed them.
‘The people have decided to send a strong signal to boards, the federal council [Swiss government] and the parliament,’ says Thomas Minder, the Swiss senator and businessman who sponsored the proposals, in a press statement. ‘It’s a powerful signal the proportion was more than 60 percent.’
The vote could curb pay and bonuses for some of the world’s highest-paid CEOs, including the chief executives of companies such as pharmaceuticals company Novartis, food giant Nestlé, industrial goods manufacturer ABB, and others. Many large international companies have also set up bases in Switzerland due to lower taxes. These companies would also be subject to the new laws.
Minder’s proposals were reinforced in February amid controversy over a planned bonus of as much as $78 mn for outgoing Novartis chairman Daniel Vasella. The controversy persuaded Novartis to cancel the deal, which would have prevented Vasella from working for rival companies.
The referendum, which follows years of international controversy over executive pay sparked by the global financial crisis, comes just days after members of the European Parliament proposed a measure that would ban bonuses for bankers that are more than twice the banker’s annual pay. The measure still faces approval by the full parliament and the individual EU member states.
