Nestle SA’s chairman said Switzerland is becoming more difficult as a business location after voters last month approved some of the world’s toughest limits on executives’ pay.
“The political and regulatory environment for publicly listed companies is becoming more difficult in this country,” Peter Brabeck-Letmathe told shareholders at the Vevey, Switzerland-based company’s annual general meeting in Lausanne today.
The initiative against “fat cats,” proposed by Thomas Minder, head of a herbal toothpaste company, was backed by 67.9 percent of the voters in a March 3 referendum. The measure would give shareholders an annual ballot on managers’ pay, eliminates sign-on bonuses, severance packages and extra incentives for completing merger transactions. The initiative also includes rules punishing executives who violate the terms with as long as three years in jail.
“It is now crucial to respect the Swiss voting population’s decision and to find practical legislative solutions which safeguard the long-term attractiveness of Switzerland as a business location,” Brabeck said in his speech.
Nestle, the world’s biggest food company, has invested more than 3.2 billion Swiss francs ($3.4 billion) in Switzerland over the past 10 years, boosting its headcount in the country by 3,500 to more than 10,000 employees, he said. More than 60 percent of the company’s global research and development spending is in its homeland.
“Nestle wants to stay in Switzerland,” Brabeck also said, adding that country’s long-term stability is “constantly being challenged.”
The government has said it will issue directives to implement the Minder initiative within the next year. Parliament will then need to amend national laws.
The Nescafe maker said Feb. 14 it expects 2013 to be as challenging as last year, when sales missed analysts’ estimates on a slowdown in emerging markets, the source of more than 40 percent of its revenue.
Brabeck’s total compensation in 2012 was 6.97 million francs, while Chief Executive Officer Paul Bulcke was paid 9.97 million francs, according to Nestle’s annual report.