As was to be expected given the intense campaigning by opponents (including the government/parliament and big business) over the last 6 weeks, Swiss voters have rejected by 65.3% to 34.7% the initiative launched by the youth wing of the Social Democratic Party proposing to put in place a cap on executive remuneration to no more than twelve times the lowest salary in a company. The arguments of the opponents (job losses, erosion of economic competitiveness, shortfall in tax receipts, increased bureaucracy, etc) will have prevailed over the socialists’ desire to redistribute wealth more equally (see PDF for a list of top executive salaries greater than 1:100 paid in 2012 according to Travail Suisse, an association of trade unions).
However, given that this referendum came only eight months after the referendum on the so-called Minder initiative (requiring a binding vote on executive salaries and banning golden parachutes amongst other measures) was successful, this is certainly indicative that there is a substantial portion of Swiss citizens who are not only feeling very uneasy about excessive executive compensation (261 times the lowest salary in the case of Roche’s Austrian CEO in 2012, 434 times in the case of Credit Suisse’s American CEO in 2009), but that they also think something should be done about it. Given the economic hardship present in many European countries, the Swiss referendum on curbing CEO pay to a ratio of 1:12, despite having been unsuccessful in this country, may well ignite (or reignite in some cases) the debate elsewhere.
Some links to studies criticising prevailing executive remuneration practices:
- Does the market for CEO talent explain controversial CEO pay practices? (Martijn Cremers and Yaniv Grinstein, The Harvard Law School Forum on Corporate Governance and Financial Regulation, 18 September 2013)
- The myth of global high pay talent market, The High Pay Centre, May 2013
- Executive superstars, peer groups and overcompensation: cause, effect and solution, Charles M. Elson and Craig K. Ferrere, 7 August 2012
Miscellaneous articles in the English-speaking press ahead of the votation:
- Swiss bosses on vote to decide executive pay limit, BBC, 22 November 2013
- Swiss electorate to vote on executive pay curbs, BBC, 22 November 2013
- Swiss to vote on linking bosses’ pay to wage of office cleaner, Reuters, 19 November 2013
- Swiss outrage over executive pay sparks a movement in Europe, Reuters, 15 November 2013
- Swiss executives braced for Sunday poll on pay, Financial Times, 22 November 2013
- Swiss poll stirs debate on executive pay, Financial Times, 12 November 2013
- Swiss rage against CEO pay provokes vote on salary limits, Bloomberg, 19 November 2013
- Should Swiss CEO pay be capped? A vote may make it so, Wall Street Journal, 14 November 2013
- Why the Swiss Scorn the Superrich, New York Times, 22 November 2013
- Swiss divided as 1:12 executive pay referendum nears, The Guardian, 14 November 2013
Amended on 25 November to include the nationalities of Roche‘s and Credit Suisse‘s top executives.