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Switzerland: Referendum Rejects Limits on Executive Pay

(Dec. 12, 2013) On November 24, 2012, the Swiss people voted on a popular initiative that would have amended the Swiss Constitution by adding a new article 110a to limit executive pay to 12 times the pay of the lowest-paid worker in the company. (Eidgenössische Volksinitiative ÆÂ?:12 – Für gerechte Löhne,’ Federal Chancellery website (Dec. 3, 2013).) The initiative was rejected by 65% of the voters. (12.017 1:12 – Für gerechte Löhne. Volksinitiative, Swiss Parliament website (Nov. 25, 2013).)

The initiative had been promoted by the Young Socialists of Switzerland as a matter of economic justice. (1:12, Gemeinsam für gerechte Löhne, Junge SozialisInnen der Schweiz website (last visited Dec. 6, 2013).) Swiss commerce and industry, however, were opposed to the initiative on the grounds that it would have led to an exodus of major Swiss and multinational companies that have their headquarters in Switzerland. (Schweizer Demokratie of dem Prüstand, NEUE ZÜRCHER ZEITUNG (Dec. 6, 2013).)

The Swiss are not totally averse to limiting executive pay. In March 2013, the Swiss approved an initiative that requires that the total amount of executive compensation and director’s pay of a corporation to be determined at the annual shareholder meeting. (Edith Palmer, Switzerland: Referendum on Executive Pay, GLOBAL LEGAL MONITOR (Mar. 27, 2013).) A recent poll of foreign investors showed that this measure had no dampening effects on the attractiveness of Switzerland as a business location. (Abzocker-Initiative lässt ausländische Investoren kalt, NEUE ZÜRCHER ZEITUNG (June 6, 2013).)