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25 Nov, 2013 03:34

CEO pay cap initiative rejected by Swiss referendum

CEO pay cap initiative rejected by Swiss referendum

Switzerland has rejected a proposal to limit the salary of CEO’s to 12 times that of their lowest-paid employees, following a massive campaign by big business who spent millions in advertising against the measure.

The measure was opposed by 65 percent of voters, the government of Bern said Sunday, claiming a voter turnout of 53 percent, the highest in the last three years. The proposal was rejected by a margin of around two to one.

“It’s a big relief,”
Valentin Vogt, president of the Swiss Employers’ Association, said in an interview on Swiss national television SRF. “It’s a signal that it’s not up to the state to have a say in pay.”

The referendum on the so called “1:12” initiative came after Swiss voters approved the so-called fat-cat initiative in March that allocates the shareholders a binding vote on top managers’ salary and blocked extra compensation such as the severance pay.

Introduced by Young Socialists, supporters of the “1:12 initiative” argued that imposing a limit on earning would create more transparency and greater fairness. They claimed that the initiative would have affected 0.3 percent of all Swiss companies and some 3,400 top managers.

Opponents on the other hand said that such a move would damage the country’s economy which heavily relies on its banking sector. They argued that imposing a salary cap would destroy Switzerland’s competitiveness and drive out multinationals as they would not be able to offer high salaries for the world’s best talent. 

AFP Photo / Fabrice Coffrini

Corporate 'fat cats' in Switzerland have poured big money to sway the result of the referendum. Supporters of the bill said the PR campaign in pre-poll period was defeated by a 1 to 40 disparity with 200,000 Swiss Franc ($220,000) spent by the organizers of the campaign and 8.8 million Swiss Franc by the corporations and lawmakers opposing it.

The initiators of the bill said they will continue to fight.
“Today we’ve lost,” Young Socialist party leader David Roth told SRF. “But we’ll continue to fight long term.” “Our opponents succeeded in making people afraid,” Roth said referring to the fear mongering tactic used by big corporations.

For instance Swiss lawmaker Ruedi Noser said the 1:12 proposition would turn Switzerland into the “North Korea of Europe."

The small mountainous nation is home to at least five of Europe’s 20 best-paid CEOs. Before the vote, a poll taken by the Swiss market research institute gfs.bern showed that 36 percent of those questioned were in favor of the 1:12 initiative, down from 44 percent in October when the polls were split.

Following the referendum, Economy Minister Johann Schneider-Ammann welcomed the result, saying that the idea of pay curbs was “absurd.”

 “We know there would have been lots of ways to circumvent the restrictions,”
he said. “Switzerland stays attractive as a business location.”