Capping executive pay? – Switzerland says “No”
Switzerland has rejected, in a referendum, a proposal on capping executive pay to 12 times what the lowest paid worker receives, with 65.3% against and 34.7 in favor.
Many business analysts had been wondering how Switzerland would have functioned had the vote gone the other way.
Capping executive pay to, say $360,000 per year (12 times $30,000), would have meant that the bosses in the head office of Nestle, Novartis, Roche and ABB would be earning much less than their underlings in the USA and some other countries.
Novartis’ current chairman is paid a salary of 3.8 million francs ( $4.2 million) per year, according to Fierce Pharma. The previous chairman was on $13.98 million.
Capping executive pay – a big issue in Switzerland
This is the second referendum in 2013 regarding capping executive pay. In March people supported limits on bonuses and golden hellos and handshakes. A golden handshake is money a company gives an employee or executive when they leave.
In February this year there was a public outcry in Switzerland when drug giant Novartis agreed to give Daniel Vasella a $78 million golden handshake as part of a non-compete contract. This meant he would be paid every year as long as he did not go and work for the competition and tell them all Novartis’ secrets. Due to public pressure the deal was called off.
There is also resentment among many Swiss people about fat cats receiving giant pay packages in either companies that are not doing well or are downsizing.
The “1:12 initiative for fair pay” was a proposal put forward by the youth section of JUSO (Social Democrats). They believe that nobody should have a monthly salary which exceeds other people’s annual income.
In an interview with Reuters, David Roth, JUSO President, said “Of course we are disappointed. But I also believe that we have an achievement nonetheless. A year ago, opponents were defending high salaries. Today’s no-one doing that. No-one in Swiss politics would dare say that million salaries are justified.”
Next year Switzerland holds another referendum on whether workers should have a guaranteed minimum wage. There are two proposals, one is to have a minimum wage of 22 francs per hour ($24) which equates to 4,000 francs ($4,400) per month, the other is an unconditional income for all adults, including unemployed people.