Swiss campaigner scents victory in fat cat pay battle
BERNE (Reuters) - A Swiss businessman-turned-politician is confident citizens will vote to impose some of the tightest controls on fat cat pay in the world, rejecting warnings from the country's powerful business lobby that the measures will scare big companies away.
Thomas Minder, elected last year as an independent member of the upper house of parliament, has led a four-year campaign to give shareholders a binding vote on the pay of company managers and directors as well as ban golden handshakes and parachutes.
He is pursuing a cause that been gathering momentum across Europe and the United States since U.S. mortgage debt triggered the bursting of a global credit bubble five years ago, leading social activists and many investors to challenge the multi-million-dollar packages awarded to bankers and business leaders.
Minder is up against groups such as Economiesuisse, who say his proposals would damage Switzerland's image as a place to do business and make it hard to lure talented managers.
He blames stalling tactics by the business lobby for delaying a popular vote on the issue. A referendum is now expected on March 3.
"It is going to be a battle of money," Minder, who runs a small business making herbal mouth wash and cosmetics, told Reuters in an interview. "It's the classic battle between the small guy Minder and the huge Economiesuisse establishment."
Low taxes, stable politics and business-friendly laws make Switzerland an attractive base for some of the world's top firms including food group Nestle and drugmaker Novartis, whose American Chief Executive Joseph Jimenez was top earner among Swiss corporate leaders in 2011 on 15.7 million Swiss francs ($16.74 million).
Although the Swiss economy has sailed through the financial crisis relatively unscathed, public anger has grown as manager pay kept rising even as company profits and share prices sagged.
The issue was brought into sharp focus by bank UBS, which had to be bailed out by the government in 2008 after it made heavy losses on subprime investments, blamed by many on a past culture of lavish bonuses for risk-taking.
"I get a few thousand mails each year. The temperature is very hot. People say: 'let's vote'," said Minder.
At present shareholder votes on pay in Switzerland are not binding. But investors have increasingly used the votes to express their unhappiness about "fat cat" pay, according to a report from Ethos, an influential group that makes recommendations to Swiss pension funds.
Against a backdrop of sub-par 2011 profit and a $2 billion rogue trading scandal, more than one third of UBS shareholders rejected its pay plans in May, including a 4 million franc signing-on fee for new German chairman Axel Weber.
MINDER VS BIG BUSINESS
Minder dismissed warnings by business leaders that the new rules would limit the ability of company boards to set the pay of top management and lead to an exodus of talent and companies.
"Switzerland would be the country where the money is the safest and the shareholders would have the most say so that is where the investors would bring the money," he said.
Swiss citizens get to vote on topics ranging from smoking bans to health care in up to four national referenda each year.
However plans opposed by Economiesuisse - such as a vote in March to increase workers' annual holiday entitlement - often fail at the ballot box after heavy campaigning and advertising.
According to a poll conducted by research institute GFS Bern in May, 77 percent were in favor of Minder's initiative, suggesting it might be hard for Economiesuisse to turn the tide.
If voters reject the plan, Switzerland will automatically adopt parliament's counter proposal, backed by Economiesuisse, which would force all listed companies to hold votes on executive pay although the result would not have to be binding.
At present only 49 of the top 100 companies voluntarily consult shareholders on the pay of executives, according to Ethos, which also backs the counter proposal because it lets shareholders vote on compensation frameworks, not actual pay.
"In Switzerland, if it were to be binding, we would go from one extreme to the other: we would be the only country where shareholders would have a binding vote on the pay of company management," Ethos Director Dominique Biedermann said.
But Minder warns voting only on the general compensation regime gives companies too much room to manipulate salaries: "My feeling is it is easier for the shareholder to vote on Swiss francs and centimes and not on the political system."
(Reporting by Emma Thomasson and Caroline Copley; writing by Caroline Copley; Editing by Ruth Pitchford)
- Tweet this
- Share this
- Digg this