In a referendum over the weekend, nearly 67.9% of Swiss voters supported proposals to ban big payouts for departing managers (putting a stop to so-called golden handshakes). The proposals also call for a curb on executives of listed firms being paid compensation in advance, and - perhaps most significant of all - annual re-elections for directors.
Any managers which don’t follow the rules could face a jail sentence and a hefty fine.
The draft law, known as the Minder Initiative, is the culmination of a five-year campaign by businessman Thomas Minder, the MD of herbal toothpaste and toiletries business Trybol.
Switzerland is a relatively wealthy country with strong ties to the banking industry, and it is home to a handful of the world’s best-paid CEOs. According to Bloomberg, at least five of Europe’s 20 highest-paid CEOs work for Swiss companies.
But in the years since the start of the financial crisis, Swiss nationals have been growing steadily angry at the widening gap between the country’s richest and poorest workers.
The movement was given extra clout after it emerged last month that the board of Swiss drugmaker Novartis had agreed a 72 million Swiss franc payment to outgoing Chairman Daniel Vasella to stop him from working for a rival. Such was the public uproar that Vasella volunteered not to take the payout.
It is expected that Minder’s proposals will be voted on in Parliament in a year’s time, so there will be hoops to go through before it can become law.
The Swiss parliament will also take into account backlash from businesses. Business groups have reacted angrily to the rules, which they say will damage economic competiveness. Why, they argue, will multinationals choose to base their European headquarters in Switzerland now?
Meanwhile in the UK, the average pay for a non-executive chairman has risen 6% to £397,350 in the last year. According to the figures from the Incomes Data Services (IDS), average fees for non-executive directors (NEDs) increased by 4% last year to £64,000 - double the amount of 12 years ago.