Swiss company chief executive officers, including Roche Holding AG’s Severin Schwan and Nestle SA’s Paul Bulcke, earn some of the world’s highest salaries. That may soon change.
With more than 100,000 Swiss citizens having signed a petition to limit “fat-cat” pay, voters will decide at a March 3 referendum whether top executives should have their compensation set by shareholders. While a poll shows a majority may vote yes, the industry’s lobby group warns that it will drive out tax-paying companies and is campaigning for a softer counter proposal.
“If you have this kind of limitation on executive pay, why should an American company put their European headquarters into Switzerland,” Philip Mosimann, CEO of Bucher Industries AG, a Swiss maker of street sweepers with a market valuation of 2.1 billion francs ($2.3 billion), said in an interview. “They would leave. I’m certain of that.”
The vote is the brainchild of Thomas Minder, a Swiss lawmaker and managing director of herbal toothpaste business Trybol AG, whose petition blames highly-paid “fat cats” -- “Abzocker” in German -- for the financial crisis. If successful, the proposal will give shareholders an annual ballot on executives’ pay and block big payouts for new hires and for managers when they leave companies.
Schaffhausen to Fordham
“Shameless executive payouts have very clearly come from the U.S.,” said Brigitta Moser-Harder, an activist shareholder, who owns shares of the country’s biggest bank UBS AG and largest engineering company ABB Ltd. and regularly speaks on the subject at annual shareholder meetings and on Swiss TV. “People have been outraged about high earners for years.”
Minder, 53, has led a five-year campaign after collecting the signatures needed for a referendum. The businessman, who has an MBA from New York’s Fordham University and runs his family’s 113-year-old company, grew up near Schaffhausen, a small city bordering Germany that’s home to Swiss companies such as automobile parts-maker Georg Fischer AG.
The former Swiss army company commander wants to curb what he sees as a culture of chiefs who only stay for a short time and are still rewarded with high salaries, according to his campaign website. Minder plans to eliminate sign-on bonuses, as well as severance packages and extra incentives for completing merger transactions. He proposes to punish executives who violate the terms with as long as three years in jail.
Swiss Referendums
A survey conducted in January by researcher gfs.bern showed 65 percent of 1,217 voters supported Minder’s proposal. Switzerland holds regular referendums for issues that are able to draw the required 100,000 signatures. In 1989, an initiative to get rid of the Swiss army was rejected by the Swiss people.