According to recent exit polls, Switzerland may have just voted in some of the toughest executive pay rules in the entire world.
The new rules voted on today would allow shareholders at Swiss-listed companies a binding vote each year on the total compensation of boards of directors and senior management, as well as a total ban on "golden parachutes" and executives being paid compensation in advance. Managers who flout the rules will face prison.
Switzerland employs a type of direct democracy in its government, which allows for votes like the referendum today. According to the BBC, the first official results from Geneva show 67.7% in favor of the new rules, while a Swiss TV station is projecting 70% in favor nationally.
While Switzerland is a relatively wealthy country with strong ties to the banking industry, there has been something of an egalitarian revolt in recent years. One controversial recent case was that of Daniel Vasella, a departing chairman at Swiss drug company Novartis, who was forced out of his $78 million "golden handcuff" arrangement after a huge public outcry.
Critics of the new plan have claimed that it will leave Swiss-listed companies unable to compete for top talent with the rest of the world, or even non-Swiss listed companies within Switzerland. However, those behind the plan clearly see it as the beginning of something global.
“This is not a Swiss issue,” Thomas Minder, the businessman and politician behind the vote told the Local. “All over the world there’s the same discussion.”
The Financial Times notes that if voters reject the new rules, an alternative plan from the government will go ahead instead. The government plan would allow consultative votes on executive pay, and gives shareholders the opportunity to claim back unmerited pay.
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