The Swiss have spoken on executive pay. In a national referendum, two-thirds of voters approved sweeping new restrictions. It was a thump on the head to companies that bestow increasingly lavish compensation on their top executives. And it may be a warning to the rest of corporate Europe.
The Minder intitiative, named after a Swiss CEO-turned-politician, gives shareholders voting power over annual compensation. It also outlaws signing bonuses, golden handshakes and golden parachutes.
Would it have banned Novartis's ($NVS) aborted $78 million non-compete with outgoing chairman Daniel Vasella? That's unclear, but the uproar over that tidy little package certainly served as a rallying cry in the final days before the vote. Vasella's proposed payout was a turning point, EconomieSuisse's Cristina Gaggini told the New York Times. "It became impossible to return to a reasonable debate" after that, she said.
In fact, many details have yet to be worked out, as Bloomberg reports. Though the Swiss government says it will hew closely to Minder's plan, business leaders expect Parliament to soften things a bit when it actually adopts the requisite new laws. One CEO told the news service, "In Switzerland we say: The soup is seldom eaten as hot as it is served."
Swiss business leaders had campaigned against the Minder initiative, saying that the country could lose top executives. The rules would hamper companies' recruiting, too, they said, and so some businesses might pull out of Switzerland altogether.
Voters apparently didn't buy that argument--or didn't care at a time when leading Swiss executives are taking home many millions of francs. Now, one economist figures it's part of a European trend. Germany's opposition called on Chancellor Angela Merkel to put forward her own exec pay rules, Bloomberg reports. And as the NYT notes, Europe's Parliament last week limited bonuses for bankers.