Why Rich Switzerland Is Livid About Rich-Executive Payouts

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Christian Hartmann / REUTERS

Daniel Vasella, chairman and former CEO of Swiss drugmaker Novartis, gives an address at the annual general meeting in Basel on Feb. 26, 2010

The anger over excessive executive pay has finally spilled over to affluent Switzerland, more than a year after igniting the Occupy Wall Street movement in the U.S. The outrage over corporate greed reached a boiling point last week with the news that Daniel Vasella, chairman of the Swiss pharmaceutical giant Novartis, was offered a $78 million payout to ensure he would not work for a rival company after his retirement on Feb. 22.

The announcement sparked a public outcry rarely seen in this usually placid country. Politicians and unions called the compensation “disgusting,” while an attorney representing small shareholders filed a lawsuit accusing Novartis and Vasella of the misuse of company funds. Faced with the mounting criticism, this week Vasella — who reportedly earned $14 million last year — announced he would forgo the payment because “many people find the amount unreasonably high.”

That is an understatement even in Switzerland, which has the richest and highest-earning population in the world. But the Swiss believe that wealth must be earned through hard work rather than handouts or windfalls and that the superrich should not flaunt their money. They often cite the example of the much admired Swiss tennis champion Roger Federer, who has remained modest and down to earth despite amassing great wealth.

(MORE: Daniel Vasella)

One of Switzerland’s most vocal critics of exorbitant corporate compensations is businessman Thomas Minder, who was famously — and forcibly — escorted out of a UBS shareholders meeting in 2008 for storming the podium to blame the bank’s then chairman, Marcel Ospel, for the loss of $50 billion during the subprime crisis, which required a bailout from the Swiss government. Minder is the CEO of Trybol, a firm that manufactures natural body-care products, but he has long expressed disdain for executives who are handed multimillion-dollar salaries, bonuses and other perks, especially when these payouts are not justified by their companies’ performance.

So Minder turned to Switzerland’s unique brand of direct democracy that allows any citizen who collects 100,000 signatures on a petition to bring an issue to a nationwide vote. On March 3, the Swiss will vote on his initiative, which would require shareholders to approve the pay of executives and board members of public companies.

“The initiative is not about high salaries in general but about excessive executive compensation, especially in companies that have not performed well or have been mismanaged,” Minder tells TIME. He cites the example of the country’s two largest banks, UBS and Credit Suisse, which have paid their top brass millions, even though share prices of both banks plummeted during the financial crisis and have not risen significantly in the past few years. As for Vasella’s controversial exit package, “no manager is worth that much money,” Minder notes.

Although several countries, including the U.S., allow shareholders to vote on the executives’ pay, Minder’s initiative goes even further. Such votes would not be optional; all public companies would have to poll shareholders on the compensation of their CEOs. The proposal would also ban “golden parachutes” — generous severance packages provided to top managers who leave because of a takeover or restructuring. Penalties such as hefty fines and even jail sentences would be given for violating these rules.

(MORE: The Swiss Question Their Once Proud Banks)

The government opposes the initiative, arguing that the new law would undermine Switzerland’s standing as the world’s most competitive economy by forcing companies to leave the country and deterring others from setting up there to avoid the burden of compliance with the new draconian regulations. Instead, the government has created its own, less rigid proposal that is also on the March 3 ballot, allowing shareholders to decide whether their “say on pay” vote should be binding or a just a recommendation. If voters reject Minder’s initiative, the government’s counterproposal will automatically pass.

Still, the latest polls indicate that about 65% of voters favor Minder’s proposal over the watered-down government version. Interestingly, the survey, conducted for Swiss Broadcasting Corporation, shows that the bulk of support comes from “average” (by Swiss standards) middle-class citizens — those who live in households with an income of up to $9,700 a month.

Even though, according to the Organisation for Economic Co-operation and Development, Switzerland has more income equality than many other nations, including the U.S, many egalitarian-minded Swiss are peeved at the wage differential between their top execs and average employees, and they see Minder’s initiative as a matter of economic justice. “This is about a sense of fairness and social cohesion, and voters are willing to make that statement on March 3,” says Georg Lutz, a political scientist at the Social Science Research Centre in Lausanne.

For Minder, this message is right on the money.

MORE: Executive Pay: Is ‘I’ll Have What He’s Having’ Really the Best Approach? 

12 comments
jackloach69
jackloach69

Sods ----- Law.

February.---- 2014.


For almost two decades we have strived to get justice for the injustice we have suffered at the hands of a world renowned bank--- PICTET & CIE. BANK.


Two yorkshiremen both running their own small family businesses trying to resolve the problem by taking all the correct legal procedures to recover their monies.


The matter was raised in Parliament – twice-- the FSA investigated the matter concluding that PICTET had rogues operating in their London Bank --- but the rogues had left ---saying no one left to prosecute.??? ----- so there.


We then approached the Financial Ombudsman Service. (FOS) --- our case was dealt with by seven different people ---- then our numerous E-Mails were ignored --- nobody would speak to us -------so there.


We then asked the SFO ( Serious Fraud Office.) to investigate our case ---- the criteria of our case ticked all their boxes. --- we were instructed not to send them any documents/evidence.------ in fact they wrote to us advising us to go to the Citizen's Advice Bureau.(CAB.)


Richard Alderman the SFO boss ---- who responded to our letter was the same man who would not investigate the “ Madoff” scandal or the “Libor” fiasco.

The MP's committee ---- said he was sloppy--- and the SFO was run like “ Fred Karno's Circus” ----- it was an office of fraud.----- so there.


Our M.P. approached our local Chief Constable to investigate----- he was called---- Sir Norman Bettison--- Chief Constable of West Yorkshire Police ---- a force that made “ Dad's Army” look like the S.A.S. They were inept – corrupt ---malicious --- from top to bottom. We were criminally dealt with by the Forces Solicitor---- the Head of the Economic Crime Unit ----and the Chief Constable ----- so there.


We were then advised to pass our complaint against West Yorkshire Police to the I.P.C.C. – which we did --- they advised us to make our complaint to ---- the West Yorkshire Police --- we did with reluctance --- all we got was abuse and obfuscation. ----- so there.


Sir Norman Bettison ---- The Forces solicitor--- and the Head of the Economic Crime ---- have all been removed from their posts and facing criminal allegations.

------ so there.


We even sought justice through the Courts --- culminating in a visit to the Court of Appeal-London.--- On leaving the Courts of Appeal that day our barrister a “rising star” informed us --- that if that was Justice then you can keep it. He quit the law and moved to Canada ----- so there.


A few years later we learned that one of the judges in our case at the Court of Appeal was related to a senior executive of the Pictet Bank -----so there.


Pictet & Cie .Bank --- voted private bank of the year 2013.

Ivan Pictet ---- Voted banker of the year 2012. ---- the senior partner --- lied on numerous occasions and had documents destroyed --- also said genuine documents were forgeries. ----- so there.


Ivan Pictet in Oct. 2013 ---- Given the Legion of Honour --- but saying that ---- honours were given to Hitler --- Eichmann --- Mussolini ---Franco --- he's in fitting company. ----so there.


MONTY RAPHAEL.Q.C. -- Peters & Peters.London. They were the banks lawyers.

Monty Raphael.Q.C. along with Ivan Pictet withheld crucial documents requested by the High Court ---- the FSA ---- and the police Fraud Squad. ----so there.


Monty Raphael.Q.C. became an Honorary Queens Counsellor in March. 2012.

Monty Raphael.Q.C. became a Master of the Bench in Nov.2012.

An expert in Fraud ---the Doyen of Fraud Lawyers. ----- so there.


This says a lot about Banks --- the consensus of opinion is that they are highly paid “crooks” ---- no wonder they voted Ivan Pictet banker of the year.


It appears that crimes in the “establishment.” are honoured by their peers.

HONOURS AMONG THIEVES.”


Full Story.---- “google or Yahoo”


Insert.


Ivan Pictet.Banker.

Monty Raphael.Q.C.

Ivan Pictet/Monty Raphael.

LeslieMichael
LeslieMichael

What is noteworthy in the article is the mention of Roger Federer. This super tennis star who amassed great wealth did so by his own hard work. He earned every penny through long hours of practice, dedication, determination and perseverance, battling formidable opponents through two, three and four hours of no-stop play. To watch Roger on the tennis court, is to see poetry in motion.

On the other hand, senior executives who are given obscene bonuses and payouts did not achieve all this by themselves. They tend to forget the highly educated, loyal, dedicated employees who work for them.

Leslie Michael      

DaveLeFevre
DaveLeFevre

This is interesting if only for that act that this payout is low based on U.S. standards.  These situations barely rate a mention in U.S. corporate-owned press.

seizeabe
seizeabe

It is not just in Switzerland. It is the world over.

Imagine the protest lodged by several GOP leaders against Prez Obama's suggestion during the State Of the Union address, to raise the minimum wage from $7.25 to $9.00. Also, how the GOP fought tooth and nail to prevent the president from wanting to raise the taxes by 3% on those who earn in excess of one million dollars. The worlds wealthiest nation has 47 million living below the poverty line. President Obama insisted that individuals in the richest country of the world, who work full time, should not have to live below the poverty line.

The very same top executives have no qualms while laying off their own employees at the lowest rung, in order to up their profits.

Inequality in the world is the greatest sin. Business leaders like Henry Ford were not just business visionaries, but had compassion and selfless leadership, beyond just the intent of wanting to make unlimited profits. Henry Ford insisted that employees must be paid reasonably, it just to make a decent living, but should also be able to buy the Ford cars that they themselves were helping to manufacture.

Education will crumble, public services will deteriorate, infrastructure will age, law and order will fail, the wealthy will be loathed and the world will shrink to a dog eat dog society.

CEOs without conscience is what corporates are turning into. It is not just charity for self promotion, but nation building and wealth creation for those working for organizations is what will create a prosperous nation.

Hadrewsky
Hadrewsky

Gee it sure would be nice if some of the people neck deep in dirty labor were payed a living wage.

Gafarot
Gafarot

It is funny why you use "livid" when their system works...

seizeabe
seizeabe

@LeslieMichael

Research any of these top executives.....

They're invariably from some elite college..... Grandfathered!

Worked very hard in classrooms.... Named after their grandparents!

And obtained exceptional grades... Open book, open Internet, open friends papers!

Garzhad
Garzhad

@seizeabe  

Really, is it so hard and so bad for employers to pay their employees adequately anymore? US CEO's make more then European ones by an order of magnitude, and yet they are far stingier when it comes to paying. I don't want socialism, I don't want communism or any of that crap, but it would be nice if employers would take care of their employees instead of screwing them over left and right for pennies. Everyone should at least be able to live comfortably, and afford most anything if they save and invest wisely.

NamecNassianer
NamecNassianer

@seizeabe 

Well said!

It is a shame that people who do not have two nickles to rub together will go out and vote for politicians who get major financial support from executives whose idea of good management is to lay them off and send their jobs overseas.

So many people voting against their own best interests...