Geneva: A large majority of Swiss voted Sunday to rein in executive pay and force business leaders to give up golden parachutes, according to early results and projections.
Official first results of the popular vote showed that in Geneva, where polling ended at noon (1100 GMT), 67.7 percent voted in favour of the initiative, with similar numbers in the canton of Vaud and Fribourg.
And projections from Switzerland’s financial capital Zurich, where voting will continue until 6:30 pm, showed 71 percent of voters want the so-called Minder Initiative, after its sponsor businessman and senator Thomas Minder, passed into law.
“The people have decided to send a strong signal to boards, the Federal Council (Swiss government) and the parliament,” Minder himself told public broadcaster RTS, adding he was not surprised by the projected results.
The draft law set down by his initiative — one of several initiatives being voted on at both national and local levels Sunday — only covers Swiss companies listed on Swiss or foreign stock exchanges.
It would limit the mandate of board members to one year, and would ban certain kinds of compensation, including the so-called golden handshakes or golden parachutes given to executives when they leave a company.
In addition, it would ban the bonuses received for takeovers, or when a company sells off part of its business.
While Switzerland has avoided the level of economic crisis seen in the European Union, which surrounds the Alpine nation, public anger has risen there as elsewhere over what is deemed abusive levels of pay and bonuses for top bosses.
Among those in the spotlight have been Daniel Vasella, former head of pharmaceuticals giant Novartis, who made 15 million Swiss francs (12 million euros, $16 million) in 2011.
Adding fuel to the fire was Vasella’s planned 72 million Swiss franc golden parachute, to be paid out over six years, provided he did not go to work for the competition, after stepping down this February.
The deal sparked uproar when details were leaked recently, and despite Novartis’s subsequent announcement that Vasella, at the helm since 1996, would forgo the sum, he has remained the unwilling poster boy for the referendum campaigners.
Sums made by counterparts from other companies have also been spotlighted, including the 12.5 million Swiss francs for Severin Schwan, boss of pharmaceutical powerhouse Roche, the 11.2 million of food giant Nestle’s Paul Bulcke, and the 10 million of Ernst Tanner, leader of chocolate group Lindt.
For Minder, who runs family teeth- and hair-care business Trybol SA, the massive sums on the table show that company boards have lost control of pay.
Minder told the Swiss daily Le Temps that instead of building up reserves and paying out five-percent dividends, boards have prioritised “astronomical” executive pay.
To halt that, he argues that the only solution is to give shareholders the power to set pay, and if his initiative passes, all compensation packages to board members and the company leadership would need to be approved by the general assembly.
Anyone within the listed companies affected who does not follow the rules could face up to three years behind bars and fines amounting to up to six years of their salary, according to the text.
The Swiss government and the upper house of parliament have come out against the initiative, cautioning that some large companies might decide to move their headquarters out of the country.
Minder rejected that argument Sunday, telling RTS he expected his initiative to become Switzerland’s “best export product.”
“It is a great advantage for investors,” he said, suggesting that instead of chasing companies away, such a law would entice investors to set up companies in Switzerland.
He also said he hopes other countries will feel inspired by the initiative.
The Swiss are “not alone in this domain” of frustration over excessive executive pay, he said.
In a bid to derail the Minder text, the parliament made a counter-initiative that is seen as less far-reaching, simply setting a requirement for shareholders to be consulted over pay and providing exceptions to the ban on golden parachutes.
If the Minder initiative passes, the government will draw up a proposed law to be reviewed by parliament, before it can be passed into law — something that usually takes more than a year.
However, if the new proposed law fails to win a parliamentary majority, the counter-proposal would become law directly.