As the FT has just reported:
Switzerland is to impose a stringent set of curbs on executive pay, after voters overwhelmingly backed a package of measures that will sharply tilt the balance of power away from companies' boards and towards their shareholders.
The package is the brainchild of Swiss entrepreneur Thomas Minder, and includes giving shareholders a binding vote on executive pay, banning golden hellos and golden goodbyes, limiting directors' terms to one year, and banning bonuses that incentivise buying or selling firms. Non-compliance could lead to jail terms.
This was the result of a referendum, not a vote in parliament. 68 per cent of voters, and all of Switzerland's 26 cantons approved the changes.
People, even in Switzerland, have had enough of corporate abuse. The time for change has to be coming when that is the case. Bring on The Courageous State (shameless, but appropriate, plug).
Oh, and let's have no more of the nonsense from bankers and Boris Johnson saying the City will be heading for Switzerland very soon, because I think that argument just died a death.
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Mr Murphy
The Swiss package is very different from the EU bonus bonus cap regulation. The Swiss rule does not set a statutory limit to the amount of compensation, or it’s structure, but only makes them subject to mandatory a shareholders’ vote. It only affects the compensation of directors and executive officers, but not rank and file employees including officers.
Interestingly, the law is really only relevant for public companies listed in Switzerland. It will have little bearing on private companies or partnerships (like many of the private banks). Also, it will make little difference to the subsidiaries of foreign companies in Switzerland: the Swiss subsidiaries of JP Morgan or Glencore will continue to be able to pay their people just as they wish.
You are clearly a true far right libertarian (which is why I find you so tedious)
You have not a clue that once there is a law the public will not tolerate its abuse
And they won’t in Switzerland now that 68% of people have voted to stop it
You really do need to get your head round democracy
Can I ask:
Is MRubio right in his/her description of the Swiss rule?
Where is abuse suggested?
If MRubioc is correct then the Swiss democratic process has passed this rule?
Thanks
I have no idea what you’re asking
What I’m saying is that people do not tolerate the abuse of the spirit of the law – as in tax right now
Nor will they tolerate abuse in Switzerland where 68% have voted against excessive pay
Is it that hard to understand that there are ethical principles at play?
Mr Murphy
The Swiss people have not voted against excessive pay. They have voted for a law that mandates a shareholders’ vote regarding the compensation for certain directors and officers of public companies. This is both the spirit and the letter of the law. The judgment of ‘excessive’ is left entirely to the discretion of the shareholders, not to the public at large.
Respectfully, you ma maintain your wishful thinking
I am quite happy this will apply top to bottom
Why wouldn’t it?
Mr Murphy
There is no clearer democratic expression of the people’s will than the Swiss system of consitutional initiatives.
In this process, Te Swiss people have said very clearly that they only want these rules to apply to Swiss public listed companies, and to directors only.
Clearly, the people did not intend for other entities or their employees to be affected by the law.
Utter nonsense
And you know it
In reply to your points to my previous post:
I’m asking whether MRubio has described the Minder proposal correctly.
Here is the Guardian quote:
‘The draft law, which covers Swiss companies listed on Swiss or foreign stock exchanges’
So does the law apply to (for example) bankers based in Zurich who are traders (not directors) who work for non Swiss banks? If not, then Boris Johnson’s comment is still relevant.
You think that directors won’t pass this downward?
Pull the other one
Mr Murphy
The directors of non-Swiss companies (or of privately held Swiss entities) are unaffected by this new regulation. There is nothing to pass downwards.
It would appear from all reports that non-Swiss companies are covered
And you still refuse to engage with the impact of the cultural and not the literal change
Maybe that’s because you don’t believe in society
Mr Murphy
The text of the initiative is very clear. The regulation only applies to Swiss corporations publicly listed in Switzerland or abroad. It does not apply to foreign companies.
The initiative will have to be translated into law, which will clarify these matters.
And I repeat, your libertarian mind set entirely misses the implications of such a law
Can you please cite a reference to support your version Mr Murphy.
Have you not read the media?
We all agree the impact will be wide ranging. That’s because we get human nature
Only lawyers and libertarians try to disagree
You think that directors won’t pass this downward?
Pull the other one
A bit like tax incidence?
Just thought I’d put forward a bit of information you might find interesting that is relevant to this article.
According to a YouGov survey published last year (http://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/w3436dvzzd/Democracy%20Results%20120124%20GB%20sample%20%282%29.pdf):
49% of the UK population favours a maximum earnings cap of £1m per year including bonuses.
A fairly remarkable number when you consider that they don’t hear this from any of the main parties or papers.
Kinds of puts all the recent government and opposition rhetoric about the bonus cap agreed by the EU into perspective as they are way to the right of public opinion yet simply ignore it. Imagine what the numbers of people in favour of an earnings cap would look like if a major party spoke out in favour of it and people thought it was an actual option (rightly or wrongly), not just a personal opinion that they felt no-one else held.
Indeed – remarkable
And indication of a sense of natural justice
It’s also quite interesting that it is BNP voters who come out most in favour of a policy like that. As they do for ideas such as MP’s decisions being put to local and natoinal referendums.
A casual look through the poll seems to show that they are the most socially hardline (ie favour death penalty, no immigration), but also the most politically disenfranchised and in a weird way democratic (ie the most ahead in thinking poor families should have more say in government decisions and ‘people like you’, not large companies. (Significant sample size warning applies).
Assuming the survey is vaguely accurate, it makes me feel sad that the manifestation of this anger has been pushed to a pretty racist social platform, not the more democratic economic platform these people also seem to believe in.
I’m not quite sure how you draw your inferences from that referendum
DM
I’m not quite sure what you’re getting at as you go from the Swiss elections to talking about the BNP (who, for obvious reasons, are a UK only ‘brand’).
I understand, however, that poor people have had enough & will tend to vote racist unless someone on the left gives them a sensible argument.
In the case of the UK, we’re crying out for something sensible.
The Daily Mail & Express make a huge point of the millions we spend on housing benefit, without saying “wasn’t it tragic that Mrs Thatcher sold thousands of council homes. How dumb was that ?”
As Richard has said, the UK could borrow cheaply to build a million publically-owned homes. So why don’t we ?
It is such an obvious win:win, but the Tories won’t buy into it.
The 67.9 percent of Swiss voters are in favour of the proposal: “prohibiting managers (or remuneration committees) deciding their own wages. Shareholders will have to the right to vote on the total of all remuneration of Directors, the Executive Board and the Advisory Board. This also extends to base salaries as well as bonus payments”
That’s it.
And only “in favour of”, no law yet.
Nothing from the EU on that, at all, yet.
Except this:
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2012-0170+0+DOC+PDF+V0//EN
“ontheproposalforadirectiveoftheEuropeanPar
liamentandoftheCouncil
ontheaccesstotheactivityofcreditinstitution
sandtheprudentialsupervision
ofcreditinstitutionsandinvestmentfirmsandame
ndingDirective2002/87/EC
oftheEuropeanParliamentandoftheCouncilonth
esupplementary
supervisionofcreditinstitutions,insuranceunder
takingsandinvestmentfirms”
Have fun reading that. Loads of waffle, but no law. Since the European Commission have to propose it, and corporate capture is rife there, no chance ! (in fact the Big Four seem to dominate the EU)
Since shareholders are dominated by investment institutions I have little doubt that any proposal will have minimal effect !
inafinancialconglomerate
(COM(2011)0453—C70210/2011—2011/0203(COD)
“giving shareholders a binding vote on executive pay, banning golden hellos and golden goodbyes, limiting directors’ terms to one year, and banning bonuses that incentivise buying or selling firms. ”
These are all very important things to achieve to match earnings with performance, though as others have mentioned it doesn’t restrict the amount paid. Personally I don’t have an issue with that as long as it is properly related to performance. We don’t restrict actors/pop stars/ footballers earnings, so I don’t see why we should restrict one groups.
“The translation of the text is as follows.[3]
“
I
The Federal Constitution of 18 April 1999 is amended as follows:
Art. 93 paragraph 3 (new)
(3) In order to protect the economy, private property and shareholders and to ensure sustainable management of businesses, the law requires that Swiss public companies listed on stock exchanges in Switzerland or abroad observe the following principles:
(a) Each year, the Annual General Meeting votes the total remuneration [4] (both monetary and in kind) of the Board, the Executive Board and the Advisory Board. Each year, the AGM elects the President of the Board or the Chairman of the Board and, one by one, the members of the board, the members of the Compensation Committee and the independent proxy voter or the independent representative. Pension funds vote in the interests of their policyholders and disclose how they voted. Shareholders may vote electronically at a distance; proxy voting by a member of the company or by a depositary is prohibited.
(b) Board members receive no compensation on departure, or any other compensation, or any compensation in advance, any premium for acquisitions or sales of companies and cannot act as consultants or work for another company in the group. The management of the company cannot not be delegated to a legal entity.
(c) The company statutes stipulate the amount of annuities, loans and credits to board members, bonus and participation plans and the number of external mandates, as well as the duration of the employment contract of members of the management.
(d) Violation of the provisions set out in letters a to c above shall be sanctioned by imprisonment for up to three years and a fine of up to six years’ remuneration.
II
The transitional provisions of the Federal Constitution shall be amended as follows:
Art. 197 section 8 (new)
8. Transitional provisions for article 95 paragraph 3
Pending implementation of the law, the Federal Council shall implement legal provisions within one year following the acceptance of article 95 alinea 3.”
In short, what M. Rubio said.
I have never for a moment denied what the law proposes
All I have suggested is that the behavioural consequences will be much wider – in other words, as all the media agree, the message will be taken as a broad based cap – which is what in practice may emerge. And libertarians simply don’t understand that
Is that because normal human behaviour is incomprehensible to libertarians or that logical positivism destroys any ability to comprehend nuance?
None of the above. You’re making it up.
The law gives power to shareholders, not the mob as you claim.
Will that that have broad societal consequences? Yes, of course. That is not the same as “broad based cap.” As shareholders, we can pay executives whatever we like.
Separately, appeal to authority (“as all the media agree”) is not an argument.
Nor is what ever “libertarians” do or do not understand.
Nor are any putative effects of logical positivism.
And I disagree
On the good grounds that I am quite confident the impact will be as I predict