Swiss voters will decide whether or not to implement strict new rules on CEO pay that would cap chief executives’ earnings at 12 times that of their lowest-paid full time employees.
The measure has been prepared by Switzerland Young Socialists, a political group that aims to flatten wages in the country. The measures, if approved by voters, will limit executives to a salary that’s just 12 times as much as their lowest-paid worker.
Swiss economists believe that that proposed measures were inspired by revelations that some Swiss executives are earning almost 200 times more than their employees due to bonuses and other compensation agreements.
The country already voted to reduce big bonuses for executives earlier this year as Swiss citizens learned of multi-million dollar bonuses for bank management. Other compensation agreements to come under extensive regulation in Switzerland are golden handshakes and severance agreements worth millions of dollars.
In the last year, Swiss residents learned that the country’s banking giant UBS gave out over £1.6 million in bonuses to its top-ranked staff, despite losing exactly the same amount of money during the 2012 financial year.
Some of the country’s highest-paid managers and executives often earn more than 200 times that of their lowest-paid staff. Credit Suisse’s chief executive reportedly earned over 820 times more than the bank’s lowest-paid employee during the peak of the financial boom – an example pointed to by supporters of the new bill.
Economists have criticised the bill, claiming that it would lead to an exodus of high-level executives and management staff. Placing limitations on compensation could send many of Switzerland’s most skilled and experienced executives to countries that do not cap salaries or bonuses, many economists claim.
The new laws will be voted on this weekend, with supporters of restrictions on CEO pay hoping for a result that mirrors that of the recent anti-bonus laws.
