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Nestle could leave Switzerland if salary cap imposed

Published on 14/09/2009

Geneva — The world’s biggest food company Nestle could leave its homebase Switzerland if Bern imposes a cap on executives’ salaries, the group’s chairman said in remarks published Sunday.

"It would be the beginning of an end," Peter Brabeck told Swiss newspaper Sonntag, in reply to a question about calls for the federal government to impose salary ceilings.

Asked what kind of consequences such a move might have on Nestle, a national corporate icon, Brabeck replied: "Then we must ask ourselves whether Switzerland is still the right location for us."

The global financial and economic crisis has prompted mounting public anger against high pay and bonuses drawn by executives, particularly those who work in the finance industry.

In recent weeks, politicians from some industralised economies have been pushing for caps on wages.

For Brabeck, Switzerland’s most attractive characteristic has been the "legal certainty" that it offers. However, he said that this certainty, which was "like a granite block, has been dampened."

"Recently, there has been external pressure on Switzerland and populist pressure from within. There we’ve seen that the government and parliament was rather quickly prepared to amend existing laws.

"That is damaging for a location. Switzerland was once known for not ceding to such demands."

In a landmark out-of-court settlement with US authorities, major Swiss bank UBS agreed to reveal the identities of 4,450 American clients. For some, this meant that Switzerland’s strict banking secrecy rules had been compromised.

Brabeck said the UBS case was not isolated, and cited pressure from the German Finance Minister Piers Steinbrueck on Swiss banking secrecy rules as another example.

"For Switzerland as a location, it is important that legal certainty stays — it must in part even be rebuilt," Brabecks said.

Headquartered in Vevey, in the west of Switzerland, Nestle last year posted net profits amounting to 18 billion Swiss francs (17.3 billion dollars, 11.9 billion euros).