Switzerland Rejects Proposal To Limit Executive Pay

Tyler Durden's picture

Confirming that the brotherhood of the "fairness doctrine" in which everyone is equal to everyone else (but some are too big to fail or prosecute, and are thus a little more equal) will have to do more work to bring wayward Switzerland, home to some of the world's biggest companies, fattest bank accounts and wealthiest individuals, into the socialist fold was the announcement moments ago that Switzerland roundly rejected a proposal to limit executive salaries to 12 times that of the lowest paid employee, with 66% of the voters opposing. This so-called "1:12 initiative for fair pay," was brought about by the youth wing of the Social Democrats (JUSO) which claimed that nobody should earn more in a month than others earn in a year. The outcome is notable because it was in March when Swiss voters backed proposals to impose some of the world's strictest controls on executive pay, with some 70% of voters thought to have supported plans to give shareholders a veto on compensation and ban big payouts for new and departing managers. Surprisingly, just over six months later, the drive to bring more equality to all appears to have lost it steam.

"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."

Maybe not, but they refused to enact it into law, which means that million and much higher salaries will continue. From Reuters:

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.

Meanwhile, corporations and others who benefit from unlimited pay, are understandably delighted:

Opponents to the proposal had warned it would harm Switzerland by restricting the ability of firms to hire skilled staff, forcing firms to decamp abroad, resulting in a shortfall in social security contributions and higher taxes.


"It's an important decision for the Swiss business location," Valentin Vogt, president of the Swiss Association of Employers told Swiss television SRF. "The Swiss people have clearly decided that it's not up to the state to have a say on pay."


The Swiss have a history of voting against proposals they feel could hurt the country's economic success story or threaten competitiveness.

The last is particularly surprising in a world in which workers are eager to make their lives as easy as possible because contrary to the rest of the world, in Switzerland initiatives to increase workers' annual paid holiday allowance to six weeks from four and to cut the working week to 36 hours from 42 both have failed at the ballot box in the past. Impossible US labor unions would say. But such is life when one is actually concerned about the long-run instead of just maximizing one's consumption potential in the here and now.

Still it is likely that anger at social inequity will continue even in this most "neutral" of countries:

Some Swiss firms have acknowledged the public anger. Last month, Credit Suisse said it made a "mistake" by paying Chief Executive Brady Dougan 19.2 million francs ($21 million) in cash and stock in 2009, plus 70 million francs($76.75 million) worth of stock under a bonus plan for 2004. That meant his total pay was 1,182 times that of the bank's lowest paid employee, according to Travail.Suisse.

Finally, while Switzerland may have no problem with capping executive pay at 12 times the minimum wage, we wonder how the Swiss, or Americans for that matter, would feel about a ratio of nearly 20 times that, or 213 to 1 which is how much more, at last check, the average Fortune 50 CEO made more than their average worker.


Fortune 50 CEO Income Compared to Average Worker at Company [infographic]

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bugs_'s picture

if you like your executive pay, you can keep your executive pay

CH1's picture

There is a difference between discouraging or disliking something and using violence to stop it.

All laws are authorizations of violence.

Occident Mortal's picture

Shareholders can pick their own board members and pay them whatever they like.

God damn communists.

CH1's picture

Shareholders can pick their own board members and pay them whatever they like.

Right, and if the rest of us have any sense, we'll avoid them and their fascist, political partnerships.

(See my note on violence above, if you're unsure of my meaning.)

sosoome's picture

Fascist political partnerships, which attempt to herd us all into trading with and working for the big corporations, is the problem, not what any particular exec earns.

Buckaroo Banzai's picture

It's shareholders that should be in revolt over corporate executive pay. And not just salaries; executives loot shareholders blind mainly via stock option schemes.

The corporate form of business organization really needs to get changed back to what it was in the early 19th century: corporations chartered for specific purposes, and with time-limited charters that, once they expired, killed the corporation. Corporations are good for building roads or bridges, not ongoing businesses. The "corporate veil", the agency problems (moral hazards), and the unlimited life of the "corporate person" all conspire to make the corporation the master of society, not the natural person.

And the most disturbing part is what is happening now-- corporations are making the transition from national entities to international entities, and the interests of the executives who run corporations are rapidly aligning with those of International Socialists. We are seeing a gradual transition of corporate executives into a Privileged Ruling Elite that is becoming hard to distinguish from, say, the ruling Communist Party elite in China.

If this seems hard to believe, think about the last time you heard a major corporate executive speak out against the ruling elite in any socialist European, or communist Chinese, government? Can you think of a single major corporation that isn't completely in bed with the Obama administration, which is clearly a government based on collectivist economics, and Cultural Marxism?

willwork4food's picture

 Can you think of a single major corporation that isn't completely in bed with the Obama administration,..?


Follow the money trail..it works.


Pure Evil's picture

I guess we can assume where the Wookie will find a comfortable home when O'liar has finished his term in office.

Obviously the policy holders at UnitedHealth Group are funding more than their health care.

Oldwood's picture

They don't even try to hide it anymore. They almost act like they are proud of it. Rubbing it in and all, like they do.


James_Cole's picture

It's shareholders that should be in revolt over corporate executive pay.

Shareholders must get fucked 8 ways to Sunday and there's nothing that they can do about it, I thought every investor was aware of this rule?

Obama administration, which is clearly a government based on collectivist economics, and Cultural Marxism?

But this is nonsense. Obama is clearly a plutocrat, as basically every American president has been.

AldousHuxley's picture

sharehold just means they have money. money is a social construct. society gets to determine who gets to keep money who does not. 


when is it criminal to what CEOs do to increase profit margin? 

shareholder > executive > middle manager > worker bees > charity cases


What do you do when board of directors determining CEO pay are bunch of other CEOs?

CH1's picture

society gets to determine who gets to keep money who does not.

LOL... and who or what is "society"?  Right, it's the will of the people, magically transmuted into the will of our great leader!

That works out really well, I'll bet we can check history and find wonderful stories about it.

Society is a bullshit term, used for  the purpose of enslavement. When someone says "society," grab your wallet.


Oldwood's picture

You can claim to represent "society" once you have been elected by people who you have promised free candy bars. Oh, and healthcare!

TheFourthStooge-ing's picture

It's no surprise that Swiss voters support things like giving shareholders a veto on compensation. That's simply protecting the rights of ownership, and along with those rights go responsibilities. If such a veto were to lead to the departure of critical competent executives and cripple the corporation, shareholders must bear the consequences without expectations of or even fleeting hopes for a bailout.

As far as banning big payouts for new and departing managers, that also is something which should be left to shareholders. Restoring both rights and responsibilities of ownership to shareholders also restores the incentive for shareholders to have more than just passing knowledge of the corporations they own.

Lost My Shorts's picture

Actually, I think the obstacle that stopped Swiss thirst for equality was -- they couldn't easily target true Swiss companies vs. multinationals like Transocean that headquarter in Switzerland just for tax benefits.  They don't want to drive away the tax-haven business by meddling in the affairs of multinational corporations with 99.5% non-Swiss employees.

Oldwood's picture

What is their corporate tax rates compared to individuals? How do they calculate compensation? Does it include dividend and stock payouts? What about people like Buffett that make relatively little as direct income but see massive wealth growth in their holdings and dividends? How would their income be treated in Switzerland (assuming they were citizens of course)?

Cognitive Dissonance's picture

The key to keeping the slave state functioning at high productivity rates is to hide the whip behind a perceived legitimacy........but also to make sure that the slave knows where it can be found and to demonstrate the whip's effectiveness on occasion.

Here is the so called Willie Lynch Speech. Anyone see any parallels to today's "capitalism" and "democracy"?

GeorgeHayduke's picture

You make a good point. The owners have gotten so good at it that they now have hordes of slaves willing to fight to ensure their future slavery against those other slaves over there who are different from us. It's amazing to watch.

thisandthat's picture

And no laws means anything goes... for the most powerful, if need be, through violence.

GeorgeHayduke's picture

"All laws are authorizations of violence."

True, including all laws that allow incorporation, monopolies, protection of intellectual rights, corporate personhood, market protections, exploitation of labor, etc... Same goes for laws that allow wars to protect markets, propping up of low wage slavers in other countries, removal of indigenous peoples from profit centers and destruction of natural areas for these corporate hogs. We also have laws that protect corporate property from individuals who might destroy this property. 

You are right, there sure are plenty of laws to ensure corporations have the right to do whatever they please with government violence doing the dirty work for them.

trader1's picture

metaphorically, yes

CunnyFunt's picture

If you find the compensations obscene, then feel free not to patronize the companies.

PT's picture

I actually do have a list of companies that I actively try to avoid, even if I pay more, simply because they already have enough money and I'd like to help someone else get rich.

P.S.  Plus, anyone with half a brain knows that the no-name hamburger shop sells yummier burgers than the big brands. 

CH1's picture

Well said, PT.

IMO, we should all avoid feeding the fascist state-corporate complex.

Pure Evil's picture

That's going to be harder going forward since all the big boys are doing everything in their power to eliminate small business owners.

Look what happens to communities when Big Box stores such as Home Depot, Walmart, and Costco come to town.

All those small main street stores are forced to close up shop because they can't compete price wise with the big boys.


Oldwood's picture

Our choices in how we spend our earnings are the only true "vote" we have. Sadly its not just what we buy but even larger is how we buy. Constantly using borrowed moiney has greatly empowered those who I feel are the greatest threat to freedom and prosperity.

FieldingMellish's picture

Except for health insurance where you are forced into the clutches of a large corporation or pay a fine to subsidize someone else.

HulkHogan's picture

ha... ha, ha,... ha, ha. I hate Communist China, please tell me where to find an American lumber company, computer company, clothing company,  yada, yada, that does make ALL their shit in China.

Cognitive Dissonance's picture

As less and less crumbs 'trickle' down from the top we peons will just have to fight our fellow slaves that much harder for the remaining spoiled meat.


Ignatius's picture

Important lesson from history:  steal early and steal well.

PT's picture

One CEO gets 100 mill:  I guess he might buy a Ferrari or a Bugatti Veyron to celebrate.  He might plunge the rest into a 50 million dollar estate that previously sold for 40 mill.

1000 workers get 100 grand each:  They each buy a car.  GM ups its sales by 1000, needs to put on more staff.  Someone gets promoted.  Someone gets a pay rise.  Someones gets apprenticeships.  (errr, for the sake of this exercise, we'll pretend they're not Mexican)

Forget "Trickle Down".  Welcome to "Flood Up".

Wyatt Junker's picture

And, back at the Bugatti shop, the workers get paid as do the salesmen, insruance agents etc etc in further and further trickle down just as the folks who make GM trucks but in smaller units, the Bugatti in larger, albeit more infrequent, unit blocks.  Same shit, different car.

Actually, an argument could be made just the opposite, that GM due to its high union labor cost(prior to bailouts) and ridiculous VEBA pension was far more 'flood up' than what luxury consumers typically pay out for re their own driving habits.

Same with estates.  Bigger house, bigger bills/staffs/contractor bills, maintenance workers etc. etc. 

Actually, an argument could be made just the opposite, that suburban row houses are much more subsidized, wasteful and fraud, than the mansion markets.

Trickle down always means more freedom and efficiency.  Always.

Envy much?

U4 eee aaa's picture

Those 1000 workers are also going to buy 1000 meals. Sure, the exec could buy a meal that is worth 1000 times their meal but that is just a waste of money

Squander much?

Wyatt Junker's picture

Nah.  Not a waste of money.  Mining for caviar is just as efficient as slaughtering McHappy cows for Happy Meals, its just that the caviar end user(consumer) isn't a food stamp SNAP recipient. 


Envy much?

YC2's picture

You completely ignore the differential in propensity to save and consume between the top and bottom.


You also seem to neglect the secondary effects of shifting toward conspicuous consumption on capital and on any reasonable utilitarian view of consumption.


But I guess that is convenient for you.

Wyatt Junker's picture

I hate bureau-speak, colligiot?  'differential in propensity'??  'conspicuous consumption on capital'???  'reasonable utilitarian'???  HAHAHA

K.I.S.S.  It tends to keep the discussion more nuts and bolts.

What's 'saving'? 

Is not capital formation actual money funneled into a variety of tiers within the economy? 

I can either invest in McDonald's stock or buy a Happy Meal.  In the former, as a shareholder, I am allowing corporate to invest in new McRibs iterations.  In the latter, a crackhead on SNAP gets a free shitburger. 

I'd rather invest the money in innovation.  Its much more productive and efficient than transfer payment cocksuckering.

PT's picture

Oh yes, the innovators never stop innovating, and the consumers never stop consuming.  It's what they do.  See, there are two classes in this world:  Entrepreneurial innovators and lazy workers, and never the twain shall meet.  And everyone will be richer if only the workers stayed poorer, we have scientific proof!  You must give all the money to the entrepreneurial classes and starve the useless worker classes!  It is the only way!  Never has a useless worker ever innovated anything.  Entrepreneurs magically appear from the aether, acquiring capital and transforming it into goods and services, totally separate from the worker classes ...

HulkHogan's picture

Running a multi-national, billion dollar company should require a large paycheck. 200:1 may be extreme, but the problem is not the pay, but the size of these companies. 20:1 was more normal 50 years ago because the companies were smaller and there was more competition for workers. This is only a dream and will never come true, but I'd love to see tariffs enacted and these companies forced to split up.

Urban Redneck's picture

I think the Nazi referendum was 12x the lowest paid employee, the graphic is multiples of the median employee wage (the lowest paid janitor or desk jockey at microsoft isn't pulling down six figures in salary).

Most good front line sales people in a sizable company are going to demand more than 12x the minimum compensation.

U4 eee aaa's picture

I agree. I don't think people had a problem with the limit, just the size of the limit

Peterus's picture

You don't need to split them at all.

It would be enough to stop protecting them from competiton, subsidizing (directly or not) and bailing out. Corporations in a fascist State are linked to government. They have to perform cetrain duties (like share info on customers and employees), but they get a playing field where they can only win.

For every anti-trust law there is 10 smarter, better written little laws that make thier lives better. They are paying for these laws.

y3maxx's picture

...""Plus, anyone with half a brain knows that the no-name hamburger shop sells yummier burgers than the big brands""

..Good one PT

Support Mom and Pop operations.

max2205's picture

High pay for avoiding tax and off shoring jobs and cutting jobs


How patriotic. ..what demon wouldn't feel guilty about getting 10 ml per month?


Fuck united health care

Oldwood's picture

But if you spill a scalding hot cup of coffee in your lap, your are not going to be able to sue the mom and pop burger shop for nearly as much as micky dees. Lawyers and insurance premiums have a lot to do with who you ultimately buy your burger from. Everything is designed to favor the big TBTF type operators.

PT's picture

Donald Trump, from The Art of the Deal:  "I don't do it for the money.  I already have more than I will ever need..."

Quoted from memory.  Feel free to look it up and tell me the exact wording.

BTW, he's not the only rich guy to express this sentiment.  I've always wondered if we could call their bluff.

"If you pay the hired help too much, they get lazy."  - Some other ZH poster said that the other day.  I called him out on it at the time.  Time to get some lean and mean CEOs?

Outsource the CEOs to China?  Never mind, some times they do it themselves.  Or was it Taiwan?

(Look at #8) 

Svendblaaskaeg's picture

"Donald Trump, from The Art of the Deal: "I don't do it for the money. I already have more than I will ever need..."

Echo that - on a much much...much lower level (cant afford and dont envi Trump´s hair) - to find pleasure in the work you do, to ad value to socialty, to make a difference, that's the main thing for me, took me some years to find that out

PT's picture

The pleasureable work that I dream of doing is capital intensive and has no guarantee of a return within a sensible amount of time.  I was hoping that I'd find a way to finance it without dumping risk onto third parties.  Still dreaming.

Oldwood's picture

Speaking from personal experience of thirty years of self employment, it does seem that the more I pay someone the less motivated they are to produce. Its almost like a pay increase validates their self worth to the point that they feel entitled. It defies everything thing I thought would happen, but it has happened to often to count. A life's experience of working as a laborer, to corporate to self employed small business person has been a trip and a lot of my opinions have changed. When I was in college I was a great believer in the social safety net, but i have seen what happens to those "protected" from the consequences of their choices. We are living it today.

PT's picture

At the high paying jobs that I have been on, everyone is so grateful to be there that they are desperate not to fuck it up.  Great team spirit.  Great pride of workmanship.  Maybe because the work is not permanent.  You want to be "precious" then you won't be invited to the next job.

PT's picture

The worst spirit comes when there are different companies paying different rates.  No-one likes being a second-class citizen, so the lower paid workers lose heart.