The public backlash against soaring executive pay gained further momentum on Sunday when Swiss voters approved measures to curb executives’ pay and outlawed the golden goodbyes, which can result in directors pocketing multimillion-dollar rewards for failure.
Some 67.9 percent of voters backed the initiative, with 32.1 percent against, according to the official count broadcast by Swiss public television station SRF.
The measures will give shareholders a binding vote on executive pay, ban golden hellos and halt bonuses that encourage executives to buy or sell firms. Boards of directors that fail to comply could face jail.
“The people have decided to send a strong signal to boards, the federal council [Swiss government] and the parliament,” Thomas Minder, the businessman and Swiss senator behind the measure, told the state broadcaster, RTS.
He said he was not surprised by the projected results.
The Swiss vote came just days after Brussels revealed proposals that bankers face an automatic limit on their bonus payouts of one year’s salary, or double their salary if a majority of shareholders agree.
British Prime Minister David Cameron has signaled that he will oppose the cap on bankers’ pay.
However, he may not be able to stop a limit being imposed, as the proposal will be subject to qualified majority voting.
The referendum was sparked by public outcry over pay and bonuses for senior bosses, including bankers.
Among those whose remuneration has caused anger is Daniel Vasella, the former head of the drugs group Novartis. He was paid a total of 15 million Swiss francs (US$16 million) in 2011.
Voters were particularly outraged by plans to pay Vasella a further 72 million Swiss francs over the next six years, on condition he did not work for rival companies after he stepped down last month.
In the face of this public anger, Novartis announced that Vasella, who had run the company since 1996, would forgo the sum.
Minder says the massive sums demonstrate that company boards have lost control of pay and prefer to fork out “astronomical” salaries to executives than pay increased dividends to shareholders.
Minder told the Swiss daily Le Temps that the only solution was to give shareholders the power to set pay. If his law is passed all compensation packages to board members and company heads would need shareholder approval.
According to the proposed law, executives of listed companies who failed to abide by the new rules could face up to three years in jail and fines amounting to up to six years’ salary.