Cabinet issues executive pay counterproposal

The federal cabinet says it is taking corporate governance seriously and has put forward a counterproposal to a popular initiative on executive salaries.

In a statement released on Friday, the government said that revisions of company and accounting laws reflected the need for improved corporate governance, but said that its actions went further.

“Compared with the initiative, the proposed revision is more comprehensive and essentially covers all joint-stock companies under Swiss law – not just those whose equities are listed on a stock exchange,” it said in a statement.

The government has also extended a bill providing greater protection for shareholder assets, saying that compensation schemes “cannot continue to be self-regulated”. Fees paid to directors of exchange-listed companies would also have to be endorsed each year at companies’ annual general meetings.

Cabinet however called its draft law “more moderate” than the popular initiative, saying it represented a suitable response to excessive pay without threatening the country’s business climate.

“Were Switzerland to abandon its liberal company laws in favour of restrictive, heavy-handed regulations, it would lose its advantage over other countries as a business location,” it said.

The popular initiative, “Against fat-cat salaries”, was submitted to the Federal Chancellery in February this year with 114,250 signatures and proposes to have compensation for directors and executives decided at annual general meetings.

It also intends to outlaw so-called “golden parachutes” and bonuses.