Swiss voters approved “some of the world’s toughest limits on executive pay” in a referendum this month that will give shareholders an annual binding vote on executive pay and prohibit certain kinds of bonuses. Almost 68% of voters backed the proposal, ignoring lobbyists’ warnings that the vote could harm Switzerland’s business-friendly image.
Some members of the German press downplayed the Swiss reform, pointing out that the cap on bonuses will apply to only a fraction of bankers and can be circumvented: “In the best of cases, it will be a wake-up call for those shareholders who have stood back while some bankers helped themselves.”
Denmark, Sweden, Norway, and the Netherlands already have some form of voting on pay. As part of the Dodd-Frank financial reforms, shareholders in U.S. public companies gained a non-binding “say on pay” starting with the 2011 proxy season. This year, another 2,000 smaller U.S. reporting companies (with market capitalizations under $75 million) must also hold “say on pay” votes.
The European Parliament is moving forward with new limits on EU bankers’ bonuses and is considering a proposal to limit the bonuses of certain fund managers as a way to end “the gambler mentality in the investment fund sector.”