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Swiss Referendum Backs Executive Pay Curbs 284

Posted by samzenpus
from the torn-golden-parachute dept.
gollum123 writes in with news that Switzerland may soon have the world's strictest corporate rules. "Swiss voters have overwhelmingly backed proposals to impose some of the world's strictest controls on executive pay, final referendum results show. Nearly 68% of the voters supported plans to give shareholders a veto on compensation and ban big payouts for new and departing managers. The new measures will give Switzerland some of the world's strictest corporate rules. Shareholders will have a veto over salaries, golden handshakes will be forbidden, and managers of companies who flout the rules could face prison.The 'fat cat initiative', as it has been called, will be written into the Swiss constitution and apply to all Swiss companies listed on Switzerland's stock exchange. Support for the plans — brain child of Swiss businessman turned politician Thomas Minder — has been fueled by a series of perceived disasters for major Swiss companies, coupled with salaries and bonuses staying high."
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Swiss Referendum Backs Executive Pay Curbs

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  • Good (Score:5, Insightful)

    by AmiMoJo (196126) * <mojo@@@world3...net> on Monday March 04, 2013 @02:56PM (#43070815) Homepage

    The job doesn't justify the salary. They claim it offsets the high risks, but then they walk away with millions when it all goes wrong.

    I do a good job as a matter of personal pride and professionalism, even though I'm not earning a massive salary and annual bonus.

    • by Mitreya (579078)

      They claim it offsets the high risks, but then they walk away with millions when it all goes wrong.

      Don't underestimate the risk of having to walk away with a $5M golden parachute and look for another job while your peers are making $10M-$20M at the same time.

      Maybe the law should state that you get absolutely nothing if the company tanks. Then we'll know that high salaries are given for performance.

      • by drsmithy (35869)

        Don't underestimate the risk of having to walk away with a $5M golden parachute and look for another job while your peers are making $10M-$20M at the same time.
        $5M would let you live a quite comfortable life for 40 years ($125k/yr) - and that's assuming all you did with it was draw down the capital.

        It's actually kind of hard to underestimate that risk. It's basically nonexistant.

        Maybe the law should state that you get absolutely nothing if the company tanks. Then we'll know that high salaries are given for

    • Re:Good (Score:5, Interesting)

      by blahplusplus (757119) on Monday March 04, 2013 @03:39PM (#43071353)

      "The job doesn't justify the salary."

      Most people don't understand it's a matter of customer base (population size) and where you are in history, such salaries would be impossible in smaller societies. These exorbitant sums of money are artifacts of scale and historically large customer bases by which executives can exploit given their privileged position in society and history.

    • by mwvdlee (775178)

      This isn't so much about salary but bonusses.
      IMHO the problem with executive bonusses isn't so much the amount or that they get bonusses at all, it's the fact that they can fail horribly and still recieve a bonus. A bonus can only ever be morally justifiable if the executive produces results significantly above expectations and certain due to the executive's actions.
      How about only allowing bonusses when business results exceed official statements to shareholders. Now either the executive has really outperfo

      • by Shotgun (30919)

        IMHO the problem with executive bonusses isn't so much the amount or that they get bonusses at all, it's the fact that they can fail horribly and still recieve a bonus.

        I can think of only one counter-example to prove this rule with....Alcatel-Lucent. Old time telephony is simply going away as an obsolete technology. Really, there is simply no way to make a twisted pair carry the data that can be pumped over coax, while obeying the the laws of physics. What happens to a company who's central product is no longer needed? Can a good CEO do a better job of milking the market for the few remaining dollars than a bad CEO? Is it worth paying an extra million, if the good CE

  • by Anonymous Coward on Monday March 04, 2013 @02:58PM (#43070845)

    Before people scream socialism, this rule is to make shareholders vote on the executive pay of the company they own shares in, not government bureaucrats. This is to protect shareholders from greedy upper management.

    • by sycodon (149926)

      If anything, they should be screaming, Direct Democracy.

      • by Joce640k (829181)

        Yeah, what's the "referendum" thing, and how did they ever get one on corporate wages/bonuses? Do Swiss pigs fly?

        • Re: (Score:2, Insightful)

          by Anonymous Coward

          http://en.wikipedia.org/wiki/Referendum#Switzerland

          Basically, somebody gets support for some legislative change by collecting signatures. If sufficient signatures are collected, there will be a popular vote on it. Pretty neat, eh?

    • by Khashishi (775369)

      They're all rotten. The management is looking for the most acceptable way to embezzle the shit out of the company. The shareholders just want to just put their money somewhere where it will automatically increase without any work on their part, and so they are at odds with the management. It doesn't really matter who wins, since it's messed up either way.

  • by Trepidity (597) <delirium-slashdot@@@hackish...org> on Monday March 04, 2013 @02:59PM (#43070853)

    It provides a mechanism by which shareholders can set a pay limit for executives, and veto large pay packages which they don't think are in their interests. Since shareholders nominally "own" the company, I'm not sure why that would be particularly controversial, except that companies have been to some extent captured by their management.

    There is nothing here that prevents high corporate pay if the owners of the company feel it's justified.

    • by Trailer Trash (60756) on Monday March 04, 2013 @03:45PM (#43071443) Homepage

      Technically, the shareholders *should* be able to do this already through the Board. I think the problem in the US is that few people invest in companies directly nowadays - instead they invest in mutual funds which in turn own companies.

      I always suggest that people who work in publicly traded companies own stock and show up at annual meetings when possible. The problem is that for the normal worker they can't buy stock at the same pace that it's being given to the executives. My wife's former company was terrible about that - execs and even divisional managers were being given thousands of shares each year, either outright or as options that allowed them to buy the stock at a low price and sell it immediately at a much higher price, with the risk totally eliminated by the fact that they had no requirement to buy in the first place.

      We really need to get back to free market principles here, instead of this crazy system where executives rape companies and get huge bonuses or parting gifts.

      • by Trepidity (597)

        It'd also help if the boards were comprised of more independent people. The current status-quo is that executives are all on each other's boards, which gives an obvious disincentive to play hardball on things like compensation. Does the Board think that executives should be paid a lot, because they provide immense value? Why of course, this board made up of other executives thinks the proposition to be beyond question!

        For example, here are the members of the board of directors of JPMorgan Chase:

        • The retired
      • by Shotgun (30919)

        Technically, the shareholders *should* be able to do this already through the Board.

        Except that CEO of company A sits on the board of company B, and the CEO of company B sits on the board of company A. CEO A votes to raise B's salary, and vice-versa. When someone raises a conflict of interest issue, you just substitute a close family member to sit on the board of the other company. It's not like it isn't a close knit community.

    • It shouldn't be controversial, but I also don;t see the point. Shareholder already have authority over executive salaries. The shareholders are the real bosses (in aggregate). They are the ones paying the salaries (i.e. it is essentially deducted from their profits). If shareholders can't be bothered to ensure that they are paying their employees reasonable salaries, then it means this company is mismanaged by it's owners (the shareholders) who deserve to lose their shirts. If you are a small time inve

  • BBC gone bonkers? "Support for the plans - brain child of Swiss businessman turned politician Thomas Minder - has been fuelled by a series of perceived disasters for major Swiss companies, coupled with salaries and bonuses staying high"

    Disasters, or only perceived disasters?

  • by rs1n (1867908) on Monday March 04, 2013 @03:24PM (#43071165)
    ...not just for corporations but also for the folks in Congress. While the former may theoretically happen, I do not see any Congressman voting for any measure that would limit his pay.
    • by dkleinsc (563838)

      I do not see any Congressman voting for any measure that would limit his pay.

      Congress cannot make any decisions about the pay of the current Congress, thanks to the 27th Amendment [wikipedia.org]. That includes giving themselves a pay cut. The way the public punishes Congress for giving themselves a raise is to vote them out of office.

  • by MouseTheLuckyDog (2752443) on Monday March 04, 2013 @03:25PM (#43071179)
    The shareholders exhibit very little power over the board because the board has manipulated the rules. Hope this gives the shareholders more direct control over people who are proving themselves incompetent.
    • by VAXcat (674775)
      I forget who said this quote, but it's pretty apropos - "In a company, those who manage the money usually manage to hang on to most of it".
  • This has been discussed in the US, but, as in Switzerland, as a "veto" by shareholders. Shareholders should determine CEO compensation. The US SEC tracks the total compensation of the top 5 employees of publicly held companies, and those should be the ones the shareholders set salaries for.

    The highest paid person in the company should have a total compensation set by a shareholder vote. Each shareholder puts in a number, and the share-weighted median is the CEO salary. The CEO can suggest a number, but it's not the default.

    Who gets to vote the shares? The party that pays the taxes on them. Funds that are now tax pass-throughs would have to pass through voting rights to avoid being taxed. No taxation without representation.

    For funds with a big portfolio, the shareholders can pick a compensation number for the whole fund, and the fund managers can set the compensation for each CEO. But the total can't exceed the shareholder-chosen value.

    Now that's shareholder empowerment.

  • by runeghost (2509522) on Monday March 04, 2013 @03:47PM (#43071467)

    The vast majority of high-priced C-level hiring seems to be an exercise in some sort of magical thinking. Corporations see a success, and make a superficial attempt to imitate it. Throwing millions of dollars at one (or a handful) of executives is much easier than trying to understand their own internal dynamics.

    "Steve Jobs turned Apple around, so what we need to do to make billions is find and hire the next Steve Jobs!" All while completely ignoring what Jobs actually did, leading to a situation where they'll pay millions for whichever executive wore more black turtlenecks over the last five years.

    It's Cargo Cultism. Nice to see that the Swiss are taking a step away from it.

    • by Tom (822) on Tuesday March 05, 2013 @08:08AM (#43077483) Homepage Journal

      Parent deserves more than +5. I've worked with the highest levels of management and there is so much magical thinking at these levels, it puts any witch coven to shame.

      Just one example: In many sectors, there is the unquestioned belief that only X amounts of companies can survive in the market. So the CEOs main job is to make sure his company is in the top X. If he's at X+1 or X+2, he risks being canned. No matter if the company is successful, profitable, whatever - doesn't matter because higher ups believe in that mantra.

  • by sl4shd0rk (755837) on Monday March 04, 2013 @03:48PM (#43071481)

    I support this move by Switzerland and vow to buy only Swiss cheese from here on out.

  • by Kittenman (971447) on Monday March 04, 2013 @04:51PM (#43072157)
    Ask the voters. I remember a few years back the Swiss had a referendum on whether the petrol price should go up, based on ... this, this and this. Referendum took place - answer was 'yes'.
    Treat people like grown-ups and that's how they'll respond.

    Here in NZ we had a private referendum to get the government to repeal a law. Vote was yes. Government ignored it, and the law is still in place. Any flights from Auckland to Zurich?
  • by thetoadwarrior (1268702) on Monday March 04, 2013 @05:07PM (#43072371) Homepage
    You should never be able to get a bonus, as an executive, when you're company is losing money. Bankers seems to get bonuses no matter what. That defeats the point of a bonus.
    • No bonuses when companies have losses, and no golden parachutes when a CEO gets fired. At least the shareholders should be able to claw them back. The bank situation is out of control, how can any bonuses be awarded after the biggest financial crash since the great depression? It makes no sense. The problem is that it is now official policy not to prosecute bank fraud. Just a slap on the wrist fine, which essentially announces that fraud is allowed, and the fine is the cost of doing that business. Let's fac

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