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Blocher calls for safeguards on salaries

Swiss Justice Minister Christoph Blocher has targeted "fat cat" salaries (St Gallen symposium) st gallen symposium

Justice Minister Christoph Blocher has argued that large shareholder companies listed on the stock exchange need state regulation on corporate governance.

This content was published on May 18, 2006 - 11:30

This would offer better protection for the stakeholders in a company, he said at the opening on Thursday of the annual St Gallen symposium in eastern Switzerland.

The issue of high salaries has been particularly highlighted in Switzerland this year.

The controversy came after it was revealed that Marcel Ospel, the chairman of Switzerland's largest bank UBS, and Daniel Vasella, chief executive and chairman of the pharmaceutical giant Novartis, both earn around SFr20 million ($16.5 million) a year in cash and stock options.

Blocher, who represents the rightwing Swiss People's Party, said that without such a regulation there was a danger that governing board members and management could enrich themselves at the expense of the rightful owners of a company.

"To offer better ownership protection, the state must act," he said.

Managers' salaries are being debated within planned reforms of Swiss company law, which are currently in the consultation procedure.

Blocher, who spent many years as a successful entrepreneur and owner of Ems-Chemie before joining the government in 2003, outlined the plans to a packed audience.

Reforms

Under the reforms, board members' salaries must be published individually and in detail. This also applies to the highest salary within the management, and the total sum of earnings of the whole management.

And each individual board member has to be elected or confirmed in office on an annual basis.

"The board must ensure the free procedure of salary negotiation and not subject this process to the coordination of a few consultant firms," Blocher said.

"The board is the trustee of the owners and not the consultant firms... A board that does not look after the honest management of the company must be called into account," he said.

Blocher argued that such regulations did not qualify as "state intervention", saying that performance, market-value remuneration and the protection of private ownership had to be safeguarded.

He described other proposals, including maximum salaries for managers, determining salaries by outsiders, or even the "battle cry" of the socialists for the "same wages for everyone" as nonsense, saying they would have "disastrous long-term consequences" for the national economy.

swissinfo, Robert Brookes in St Gallen

Key facts

The St Gallen symposium is organised by the International Students' Committee, which is an independent student initiative of the universities of St Gallen and Harvard.
Every year a team of 26 students are the brains behind the event.
The event, known affectionately as "3 days in May", ends on Saturday.

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In brief

Christoph Blocher said the current debate on managers' salaries was characterised by lack of insight and envy.

He told the symposium he believed the greatest task as a member of the cabinet was to ensure that as many entrepreneurs as possible could run their companies in Switzerland successfully.

Profitable enterprises created employment and were the source of general prosperity.

He said whoever still believed in socialism or neo-socialism had "slept through world history".

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