Latest News

The vote gives shareholders of companies listed in Switzerland a binding say on the overall pay packages for executives and directors. Pension funds holding shares in a company would be obligated to take part in votes on compensation packages.

In addition, companies will no longer be allowed to give bonuses to executives joining or leaving the business, or to executives when their company is taken over. Violations could result in fines equal to up to six years of salary and a prison sentence of up to three years.

The outcome of the referendum was a triumph for Thomas Minder, an entrepreneur and member of the Swiss Parliament, (with no relation to the reporter) who turned a personal fight against the management of Swissair, the flagship airline that collapsed in 2001, into a nationwide referendum against "rip-off merchants."

Almost 68 percent of Swiss voters backed Mr. Minder's proposals, according to results late Sunday.

"I am very proud of the Swiss people who have sent a very strong signal to the establishment," Mr. Minder told Swiss television. Despite the fact that his referendum had been opposed by Switzerland's main political parties, Mr. Minder, who is an independent member of the Swiss Parliament, called on all lawmakers to cooperate in swiftly enacting the law.

Nonbinding shareholding votes on executive pay have also been introduced in countries like the United States and Germany in response to Occupy Wall Street and other movements that have attacked the corporate excesses and abuses that fueled the world financial crisis. On Thursday, the European Parliament also agreed to limit bonuses of bankers to two times their salaries.

In the case of Switzerland, however, Mr. Minder called for a much broader and tougher clampdown, striking a chord among citizens after the world financial crisis exposed major management failures at the financial giant UBS and other Swiss institutions.

Mr. Minder then received an unexpected boost last month when Novartis, the pharmaceutical company, agreed to a $78 million severance payout for its departing chairman, Daniel Vasella. That set off a political storm and intense criticism from some investors, forcing Mr. Vasella to tell shareholders last week that his payout had been a mistake.

Cristina Gaggini, an official from EconomieSuisse, the Swiss business federation, said on Sunday that the business lobby had made some "major errors" in its efforts to stop Mr. Minder's decade-long crusade, adding that the Novartis payout plan had amounted to a turning point in the referendum campaign.

After that controversy, "it became impossible to return to a reasonable debate," she said on Swiss national television.

Ahead of the vote, EconomieSuisse and Mr. Minder's other opponents warned of dire consequences if the referendum was successful, notably in terms of keeping Switzerland attractive for foreign companies and investors.

But Mr. Minder argued that Switzerland would benefit strongly if it gave shareholders almost unparalleled control over the companies in which they invest. Many of the country's largest companies already have well over half of their shareholding outside the country. "Investors put their money where they have the most to say, and that will clearly then be Switzerland," Mr. Minder said ahead of the referendum.

Robin Ferracone, chief executive of Farient Advisor, an American advisory firm that specializes in executive compensation issues, said that even though the referendum would add "more burden to corporate processes, I do not predict an exodus from Switzerland," because the tax and other benefits of being based in the country would still outweigh "the inconvenience" of having to adjust to stricter executive compensation rules.

Paolo Bernasconi, a Swiss lawyer, told Swiss television that the vote's result showed that the Swiss wanted to maintain a liberal market economy, but "everything we have seen in the last few years concerning bonuses and payouts was in violation of market rules."

Mr. Minder started his campaign after his family-owned business came close to bankruptcy because it had been a supplier of toothpaste and other body care products to Swissair, the airline that was grounded in October 2001.

While Swissair had run out of money, it had still managed to pay an advance earlier that year of 12 million Swiss francs (about $9.6 million) to a chief executive, Mario Corti, who then left shortly after the airline's collapse.

Mr. Minder then broadened his campaign, accusing several bankers and other prominent executives of receiving "rip-off" pay packages. In fact, Mr. Minder's campaign gained such momentum that relatively few such executives confronted him publicly, in this neutral and compromise-seeking country.

Still, Nestlé, the food company based in Vevey, was among his longstanding opponents. "No well-advised company would choose to set up headquarters in a country where an infringement of corporate government rules can lead to jail," Peter Brabeck, the Austrian chairman of Nestlé, wrote last year in an opinion piece in the Neue Zürcher Zeitung, the Swiss newspaper.