Swiss to vote on executive salaries

Thomas Minder wants to rein in the salaries of Swiss executives Ex-press

Supporters of a proposal to limit the pay of executives in Switzerland have submitted the necessary signatures to force a nationwide vote on the issue.

The group calling itself the committee against the “rip-off mentality” said it had collected nearly 118,600 names for its people’s initiative since the launch of the campaign in October 2006.

Thomas Minder, the businessman behind the initiative, said he had deliberately chosen Tuesday to hand in the signatures to the federal authorities in Bern. He said he wanted to highlight the need to crack down on greedy executives who lack moderation.

The annual shareholder conference of pharmaceutical giant Novartis and Switzerland’s largest bank UBS take place this week.

Minder said the managers of both companies earned salaries, which bore no relation to the performance of their firms.

UBS suffered heavy losses in the wake of the credit crunch in the United States.

“People are really fed up with fat-cat salaries,” Minder said. He added the support for his initiative came from small and medium-sized enterprises and ordinary citizens.

He said a planned reform of shareholder rights, underway in parliament, did not go far enough as workers’ salaries stagnate while managers pick up soaring pay packages.

Shareholders’ rights

According to trade unions, 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.

The initiative is also aimed at decentralising some of the decision-making authority within publicly listed firms and strengthening shareholder rights.

The proposal calls for boards of directors to defer to shareholders in setting salaries, bonuses and other benefits of top management and directors. It would abolish severance pay and advanced compensation.

Campaigners insist that shareholder assemblies be given the opportunity to elect the management team on an annual basis.

Parliament is due to discuss the initiative before it is put to a nationwide vote.

swissinfo with agencies

Salaries

In 2007, the Swiss business newspaper Cash reported that despite strong economic growth over the past several years, worker salaries in many industrial countries had not kept up.

In Switzerland, unions claim that the wage gap between top earners and those at the bottom of the pay scale continues to grow.

But others say that in general, management compensation practices in Switzerland are not as bad as the current debate suggests. They argue that the focus on a handful of high earners distorts the overall picture.

Switzerland is by no means the only county in which the gap between worker salaries and executive compensation has been scrutinised.

In the US, the average worker currently earns four per cent less than five years ago, and in Britain in 2007, average salaries rose only 0.4 per cent despite it being a record year for firms.

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