What's a Swiss pharma CEO worth? Try $600K, under a radical ballot initiative

The last Swiss referendum on executive pay was radical. Approved by voters this spring, it gave shareholders the right to reject pay packages for top managers and outlawed certain types of executive largesse. But another is coming up that makes those rules look lenient. 

This Sunday, the Swiss will vote on the 1:12 Initiative for Fair Pay. Under it, CEOs could be paid no more than 12 times the salary of their lowest-paid employees. Goodbye to multimillion-franc compensation packages at leading Swiss companies--including Novartis ($NVS), whose executive compensation has touched off protest after protest.

Last year, Novartis CEO Joe Jimenez garnered salary, shares, incentive pay and benefits amounting to $14.2 million. Chairman Daniel Vasella, whose pay has been a perennial source of agitation for shareholders and activists, got almost that much--about $14 million.

And Roche ($RHHBY) chief Severin Schwan nabbed $13.4 million, an amount that includes salary, incentives, shares, options, pension and other benefits. According to a study by an employee group, Schwan's 2012 compensation stood at 261 times the amount collected by Roche's lowest-paid worker, Reuters reports. That puts Roche's bottom-level earner at $51,340--which seems on the high side, but for illustration purposes, we'll go with it. Because even at 12 times that amount, Schwan's paycheck could be no more than $617,000.

No wonder Schwan figures the proposal would severely curtail his ability to recruit skilled staff. Last year, Roche CFO Alan Hippe collected compensation worth more than $7 million. Chairman Franz Humer's package topped $9 million. The company didn't report details on the rest of its top managers, but we'd wager that you'd have to move pretty far down the org chart to move below $500,000.

Meanwhile, across town at Novartis, the picture is quite similar: R&D chief Mark Fishman's compensation package amounted to more than $8.8 million, while CFO Jonathan Symonds nabbed about $5.5 million.

The proposal for these extreme limits on exec pay originated with the youth wing of Switzerland's Social Democratic party, Reuters notes. The group of young people gathered 100,000-plus signatures to get the referendum on Sunday's ballot. The rest of the country's citizenry doesn't appear to be ready to go as far; according to the latest poll, only 36% of respondents said they were in favor.

Should voters in favor of the limits manage to push the referendum over the top, Swiss companies would have some evasive tactics at their disposal, short of leaving Switzerland. Outsource low-end jobs, for one thing. Or, as Kepler Cheuvreux analysts told Reuters, put higher-end earners under contract to foreign subsidiaries. 

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Special Reports: 20 Highest-Paid Biopharma CEOs of 2012 - Joe Jimenez, Novartis - Severin Schwan, Roche