Popular initiative targets “fat-cat” salaries

Show of hands: the new initiative hopes to increase shareholder rights Keystone

The head of a small Swiss company has launched a popular initiative to combat the excessive salaries of top managers at publicly listed companies.

Supporters of the initiative claim that government plans to revise company laws do not go far enough and are demanding an increase in shareholder rights.

Thomas Minder, the boss of family-run cosmetics firm Trybol in canton Schaffhausen, launched the initiative against the “rip-off mentality” on his company website on Monday.

With support from close friends and family, Minder is hoping to gather 100,000 signatures in support of the proposal over the next 18 months to force a nationwide vote.

Executive pay packets have recently come under the spotlight as the Swiss economy thrives. According to the Swiss union federation Travail.suisse, average executive pay rises were between ten and 20 per cent in 2005, while the real value of employees’ pay packets fell on average by 0.2 per cent.

Greedy

Those behind the initiative accuse Swiss executives of greed and a lack of moderation. They also say they no longer trust parliament, which is to discuss revisions of company legislation next year.

According to Minder, whose firm employs 30 people, the government proposals do not solve the problem of astronomical executive salaries. He added that the authorities were failing to consider national interests and shareholders’ rights.

The initiative demands that company general assemblies set salaries, bonuses and other benefits of top management and directors. It is also insisting that general assemblies be given the opportunity to elect the management team on an annual basis.

The initiative organising committee hopes to benefit from union and political support, but has yet to receive a positive response.

“The unions told us that we were on the right track, but want to study the text before taking a position,” said Claudio Kuster, an initiative committee member.

swissinfo with agencies

In brief

The latest edition of the Swiss business newspaper Cash reports that over the last few years the average worker in many industrial countries is actually worse off.

In the United States, for example, the average worker earns four per cent less than five years ago although the economy grew strongly in the same period.

Last year was a record for British companies, but workers did not fare particularly well – average salaries rose by only 0.4 per cent.

Salaries in Germany and Japan, the paper claims, were only slightly above or just below inflation levels.

The Swiss picture is somewhat different. Unions say that the difference between the top earners and those at the bottom of the pay scale has continued to grow.

But others claim that in general, management compensation practices in Switzerland are not as bad as the current debate suggests, which, they argue focuses too much on a handful of high earners, distorting the overall picture.

Key facts

Best-paid Swiss managers (Travail.Suisse union figures):
Oswald Grübel, Credit Suisse – SFr37.8 million ($30.7 million);
Marcel Ospel, UBS – SFr24.2 million;
Daniel Vasella, Novartis – SFr21.2 million;
Franz Humer, Roche – SFr18.9 million;
Peter Brabeck, Nestlé – SFr17.8 million.