* Swiss anger over big bonuses fuelled by UBS losses in 2008
* Big payout for outgoing Novartis chairman sparked new
* Business lobby warns plans could hurt competitiveness
* Companies seen finding ways around measures
(Adds final results)
By Emma Thomasson
ZURICH, March 3 Swiss citizens voted on Sunday
to impose some of the world's strictest controls on executive
pay, forcing public companies to give shareholders a binding
vote on compensation.
The government said 67.9 percent of voters had backed
allowing shareholders to veto executive pay proposals as well as
banning big rewards for new and departing managers, one of the
highest approval rates ever for a popular initiative.
While anger at multi-million dollar payouts for executives
has spread around the globe since the financial crisis, Swiss
direct democracy - including four national referendums a year -
means public outrage can be translated into strong action.
Brussels agreed a cap on bankers' bonuses last week and
countries including the United States and Germany have
introduced advisory "say on pay" votes. Britain also wants to
give shareholders a binding vote on pay and "exit payments" at
least every three years, but the Swiss plans go further.
The clear majority in pro-business Switzerland was unusual
given fierce campaigning by corporate lobby group
Economiesuisse, which warned the proposals would damage the
country's competitiveness and scare away international talent.
Support for the move was driven partly by big bonuses blamed
for fuelling risky investments that nearly felled Swiss bank UBS
, as well as outrage over a proposed $78 million
payment to outgoing Novartis chairman Daniel Vasella.
"The clear support for the initiative reflects the
understandable anger of the electorate at the self-serving
mentality of certain managers," said a group representing most
of the parties in parliament which opposed the plan. "With their
misconduct, they have done the economy as a whole a disservice."
Thomas Minder, the businessman-turned-politician behind the
campaign who says his proposals are aimed at ending a culture of
short-termism and rewards for managers of badly-run companies,
said intense corporate lobbying had backfired.
"This is a clear sign of the distance between the people and
the political and business establishment," he said.
Despite threats from some executives, Switzerland is
unlikely to see an exodus of big companies, drawn to the country
by low taxes, stable politics and business-friendly laws.
Activist shareholder group Actares welcomed the result of
the referendum: "Actares is convinced that the electorate has
improved Switzerland's position as a place to do business by
strengthening shareholders' rights."
Companies will likely seek ways around the new rules to
reward executives, just as banks in Europe are looking to soften
the impact of a cap on bonuses for top staff agreed by European
politicians on Thursday.
"If a company wants to pay a top executive 25 million, then
they will find a way to do so regardless of the initiative,"
Rolf Soiron, chairman of cement maker Holcim and drugs
industry supplier Lonza, told Reuters before the vote.
Experts also question whether shareholders in Swiss
companies will make full use of their new rights.
Of the top 100 Swiss companies, 49 already give shareholders
a non-binding vote on the pay of executives. But while
opposition to pay deals is on the rise, a majority of investors
have never voted them down.
Justice Minister Simonetta Sommaruga said implementing the
proposals would be challenging, but said Switzerland would
remain an attractive location for business, due to its educated
population, quality of life, security and political and economic
stability. "I am sure the economy can cope with this."
Swiss companies employed five of the top 10 best-paid
chairmen in Europe in 2011, but only the heads of Novartis and
Roche made it into the continent's top 10 for chief executives
as under-fire big banks UBS and Credit Suisse reigned in pay.
Minder's initiative forces binding votes on compensation
every year as well as on board composition and would also ban
bonus payments to managers if their companies are taken over.
The plan also includes possible jail sentences and fines for
breaching the new rules.
While Switzerland has fared relatively well through the
financial crisis, the government bailout of flagship bank UBS in
2008 stoked anger among Swiss who blamed its heavy losses on
hefty rewards for bankers who made risky bets.
Last year, more than one third of UBS shareholders rejected
the bank's plans for executive pay, including a 4 million Swiss
franc signing-on fee for new chairman Axel Weber, after a
sub-par 2011 profit and a $2 billion rogue trading scandal.
The centre-left Social Democrats are already pushing for
another referendum on even tougher curbs on executive pay - they
want to limit the annual compensation of top managers to just 12
times that of their lowest-paid worker.
(Editing by Philippa Fletcher)