Swiss public bark at bankers' pay
Swiss citizens’ latest initiative against the huge bonuses of bankers collected 114,260 signatures.GENEVA – Popular pressure for laws against "fat cat" executive pay pushed the Swiss government on Friday into proposing a "more moderate" version of the legislation to parliament.
The two leading Swiss banks UBS and Credit Suisse have been hard hit by losses in the US sub-prime home-loan crisis and by other factors arising from the financial crisis.
And UBS has said that from now on executive and trader bonuses will be calculated on a collective rather than individual basis.
In Switzerland, citizens who manage to persuade enough people to sign up to their cause can propose bills to parliament which in turn votes on whether the bill should be put to a popular referendum.
The referendum would then decide if the bill would be passed into legislation.
Citizens launching the latest initiative called "Against fat-cat salaries" collected 114,260 signatures.
It was sparked by public outrage on huge bonuses paid to bankers such as former UBS chairman Marcel Ospel even though the bank lost billions in the subprime crisis and was forced to accept help from the state worth almost 60 billion dollars.
The popular initiative proposes that shareholders vote on total wages paid to board members. It also wants golden parachutes, golden handshakes and bonuses to be outlawed.
While it acknowledged that the "the experience of recent months and years has shown that pay policy in the corporate sector cannot continue to be self-regulated," the government called on parliament to reject the proposal.
"The Federal Council firmly believes that, were Switzerland to abandon its liberal company laws in favour of restrictive, heavy-handed regulation, it would lose its advantage over other countries as a business location," it said.
Instead, it offered a counter-proposal to amend a bill, allowing shareholders to approve the fees paid to the directors of exchange-listed companies.
But the government proposal does not lay down any bans or penalties.
"This will ensure that, in the future as today, shareholders will have sufficient scope to structure the company according to their needs," said the government.
It added that if the popular initiative was adopted, companies could move their headquarters to other more competitive locations, leading to job cuts and loss of tax revenues here.
The issue of executives' wages has become a hot potato in view of huge losses by the two top banks.
Ospel in particular has been the whipping boy and "public enemy number one" with tabloid newspaper Blick even running a campaign to get him to repay his bonuses to the bank.
Late in November, UBS announced that Ospel and other former senior executives at the bank had voluntarily renounced about CHF 70 million in bonuses and wages.
[AFP / Expatica]