Swiss government says proposed "fat cat" curbs go too far
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The Swiss government opposes a plan to clamp down on excessive executive pay due to be voted on in a referendum, saying the proposals go too far and could even encourage the short-term thinking they aim to stamp out.
Instead, the cabinet on Tuesday backed a more limited initiative to boost shareholder control over executive pay which has already adopted by parliament and will come into force if the plan being put to referendum on March 3 is rejected.
That plan is the brainchild of small businessman-turned-politician Thomas Minder, who launched his drive for reform in 2008 after huge losses at Swiss bank UBS were blamed on a bonus culture that drove managers to take too many risks.
"The government shares the basic concerns of the initiative but is of the opinion that some of the proposed measures go too far and are in part even counterproductive," it said in a statement.
It said the planned limiting of the term of board members to one year risked promoting precisely the kind of short-termism Minder criticises, while it said other provisions regulating complex compensation schemes were not practicable.
Minder's proposals include ensuring shareholders have a binding vote on compensation and banning practices like "golden handshakes" - or big payouts - for new hires and "golden parachutes" for departing managers.
The Swiss business lobby is vigorously campaigning against the initiative, saying it will drive away investment and cause an exodus of talent.
Many of the biggest Swiss companies already offer investors a say on pay, though these have not been binding, and only a few have delivered defeats for management proposals.
Alongside a binding vote on the pay of managers and board members, the Minder initiative would force pension funds to vote at shareholder meetings and disclose their voting records.
It would also let shareholders stipulate the number of additional positions board members can hold outside the company and allow shareholders to vote online.