'Fat cat' payments in Switzerland 'won't affect business environment'
If Swiss lawmakers go ahead and ban the so-called ‘golden parachutes’, or compensation packages for departing top managers, their decision ‘won't affect the environment of doing business in Switzerland, some analysts say.
According to Daria Pichugina of Moscow-based Investcafe,
"putting a cap on bonuses and different ‘golden’ payments has been
long discussed all over the world. There is no chain reaction.”
"The environment depends more on the tax rules, laws on personal data protection and other more economic related things, so I don't think there will be any effect [on the business environment]," she told RT.
"Salaries as well as bonuses in Switzerland are quite high, so there is more room for disagreement with this system from the middle class. Also, we have seen that the largest Swiss bank UBS suffered from high bonuses and excessive risk taking," she explained.
On Sunday Swiss voters supported a referendum proposal to ban rewards for departing bosses.
The majority of voters wished that the Minder Initiative, named after its sponsor, businessman Thomas Minder, should be passed into law. Minder told RTS he expected his initiative to become Switzerland's "best export product."
"It is a great advantage for investors," he said.
His draft law applies only to Swiss companies listed on Swiss or foreign stock exchanges.
It also suggests limiting the mandate of board members to one year. On top of it, the bill proposes to end bonuses received for takeovers, or when a company sells off part of its business.
According to Minder, the only solution is to give shareholders the power to set pay. Should his initiative pass, all compensation packages for top executives would need to be approved by an AGM.
Those who flout the proposed law could end up sentenced to three years in prison and fines amounting to up to six years' salary.
Two weeks before the March 3 referendum, Swiss drugs company Novartis announced plans to pay its departing chairman Daniel Vasella $78 million over the next six years to make sure he did not go to work for rivals.
“With shareholders becoming more worried about the performance of the companies, I think we’ll see less luxurious bonuses in the coming years. Corporate governance will become more and more important with time, as it influences the willingness of people to invest in the companies," Pichugina told RT.
According to AFP, the Swiss government and the upper house of parliament have come out against the Minder initiative for fear big companies would be forced to move their headquarters out of the country.
To find a compromise, the parliament has come up with a counter-initiative setting a requirement for shareholders to be consulted over pay and providing exceptions to the ban on golden parachutes.
If the Minder initiative passes, the government will draw up a proposed law to be debated in parliament. If the new proposed law fails to win parliamentary approval, the counter-proposal would become law directly.