Swiss Go to Polls on CEO Pay Limits as Rejection Probable
The Swiss vote today on whether to introduce the strictest pay limits for top managers in developed countries. Rejection looks probable.
According to the latest poll, more than half of voters oppose the 1:12 initiative in a referendum that would make it illegal for executives to earn more than 12 times the lowest paid member of their staff in Switzerland. The country is the home to at least five of Europe’s 20 best-paid chief executive officers.
Voting will end at noon local time and results are expected later today. Most Swiss will have cast their ballots by mail.
Opposition to exorbitant pay has stiffened among the traditionally pro-business Swiss following the government bailout of UBS AG (UBSN) in 2008 and the plan -- later scrapped -- by Novartis AG (NOVN) to pay outgoing Chairman Daniel Vasella as much as $78 million.
“It would be a much stricter rule than in other countries,” said Robert Pozen, a senior lecturer of business administration at Harvard Business School. “More and more countries ask for sort of disclosures like this, but I think Switzerland is the first to impose, if this passes, a binding ceiling on” executive pay, he said.
In March, Swiss voters approved the so-called fat-cat initiative that gave companies’ shareholders a binding vote on managers’ pay and blocked golden handshakes and severance packages.
While polls after that vote suggested the 1:12 initiative could pass, support for the proposal has waned, in part because of vociferous opposition by company executives, including Roche Holding AG (ROG) CEO Severin Schwan and ABB Ltd. (ABBN) chief Ulrich Spiesshofer, who said it would crimp competitiveness and damage the economy.
“Swiss voters know exactly what they have in big companies like Roche” and Nestle SA (NESN), according to Schwan. “They know these companies contribute very strongly to their prosperity. I am very confident they won’t accept an initiative like this that won’t benefit anyone.”
The proposal was opposed by 54 percent of voters questioned by pollster gfs.bern, with 36 percent backing it. The survey, conducted among 1,409 voters between Nov. 1 and Nov. 8, had a margin of error of 2.7 percentage points.
Popular initiatives are commonplace in Swiss politics, on issues ranging from health care to European Union membership. At least 100,000 signatures are needed for an initiative to come up for a national ballot.
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