Swiss voters reject proposal to limit executives' pay

Sun Nov 24, 2013 9:12am EST
 
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By Caroline Copley

ZURICH (Reuters) - Swiss voters rejected a proposal on Sunday to cap the salaries of top executives at 12 times that of a company's lowest wage, heeding warnings from industry leaders that the measure could harm the country's economy.

The wealthy nation, which is home to some of the world's biggest companies including food group Nestle NESN.VX and commodities giant Glencore Xstrata (GLEN.L: Quote), voted 66 percent against imposing the limit, according to a projection from Swiss television.

The so-called "1:12 initiative for fair pay," was brought about by the youth wing of the Social Democrats (JUSO). The idea behind the proposal was that nobody should earn more in a month than others earn in a year.

"Of course we are disappointed. But I also believe that we have an achievement nonetheless," JUSO President David Roth told Reuters. "A year ago, opponents were defending high salaries. Today no-one is doing that. No-one in Swiss politics would dare say that million salaries are justified."

Sunday's vote is just one of several initiatives being put to Swiss voters to try to address the widening income gap in the country. Switzerland will also hold a vote on whether to introduce a basic living wage of $2,800 per month from the state, though a date has not yet been set.

While anger at multi-million payouts for executives is not limited to Switzerland, the Swiss system of direct democracy - which allows for up to four national referenda per year - means popular outrage can more easily be translated into action.

Deborah Warburton, a partner at executive search consultants Hedley May said the issue has resonated in other parts of Europe.

"Even though it was a 'no' vote, the question of how to make executive pay fairer is still very much a live issue," she said, adding Britain has implemented a law to give shareholders a binding vote on executive pay while France and Germany are weighing similar measures.   Continued...

 
Salary initiative '1:12' flags are seen outside a window of an office of Swiss public workers union SSP in Zurich November 5, 2013. REUTERS/Arnd Wiegmann