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| Swiss Voters Decisively Reject a Measure to Put Limits on Executive Pay | Swiss Voters Decisively Reject a Measure to Put Limits on Executive Pay |
| (3 days later) | |
| FRANKFURT — Despite opinion polls showing widespread dismay about huge executive paychecks, Swiss voters on Sunday rejected severe limits on executive pay. | FRANKFURT — Despite opinion polls showing widespread dismay about huge executive paychecks, Swiss voters on Sunday rejected severe limits on executive pay. |
| The measure, known as the 1:12 initiative because it would have barred executives from earning more than 12 times as much as the lowest-paid employees at their companies, was rejected decisively by 65 percent of voters, according to provisional official results. | The measure, known as the 1:12 initiative because it would have barred executives from earning more than 12 times as much as the lowest-paid employees at their companies, was rejected decisively by 65 percent of voters, according to provisional official results. |
| Many Swiss were uncomfortable with a rigid, government-imposed salary cap. | Many Swiss were uncomfortable with a rigid, government-imposed salary cap. |
| Switzerland, one of Europe’s most business-friendly countries, traditionally imposes light regulation on business and has relatively low income taxes. Partly as a result, the country is a popular base not only for banks and hedge funds, which have congregated in Geneva, but also major chemical, pharmaceutical and machinery companies. | Switzerland, one of Europe’s most business-friendly countries, traditionally imposes light regulation on business and has relatively low income taxes. Partly as a result, the country is a popular base not only for banks and hedge funds, which have congregated in Geneva, but also major chemical, pharmaceutical and machinery companies. |
| An outright salary cap was considered too extreme for most voters, said Daniel Kübler, an associate professor of political science at the University of Zurich. | An outright salary cap was considered too extreme for most voters, said Daniel Kübler, an associate professor of political science at the University of Zurich. |
| “People have concerns about the way modern capitalism works, but they still prefer a free-market economy,” Mr. Kübler said. | “People have concerns about the way modern capitalism works, but they still prefer a free-market economy,” Mr. Kübler said. |
| Parliament voted not to recommend the measure, as did the Federal Council, the seven-member panel that governs the country. The council said it sympathized with the sentiments behind the initiative but feared it would drive away business and be difficult to enforce. | Parliament voted not to recommend the measure, as did the Federal Council, the seven-member panel that governs the country. The council said it sympathized with the sentiments behind the initiative but feared it would drive away business and be difficult to enforce. |
| “The people don’t want the state intervening in salaries,” Valentin Vogt, president of the Swiss Employers Association, told Swiss television on Sunday. | “The people don’t want the state intervening in salaries,” Valentin Vogt, president of the Swiss Employers Association, told Swiss television on Sunday. |
| Although the referendum was defeated, voter dismay at the behavior of some Swiss corporations and executives is widespread. Proponents of the initiative complained that companies like the Swiss banking giant UBS, which received a government bailout because of the financial crisis, continued to pay executives huge bonuses even when they performed poorly. | Although the referendum was defeated, voter dismay at the behavior of some Swiss corporations and executives is widespread. Proponents of the initiative complained that companies like the Swiss banking giant UBS, which received a government bailout because of the financial crisis, continued to pay executives huge bonuses even when they performed poorly. |
| Supporters of the 1:12 initiative conceded defeat Sunday but said they had succeeded in raising public awareness about the issue. | Supporters of the 1:12 initiative conceded defeat Sunday but said they had succeeded in raising public awareness about the issue. |
| “In the future, C.E.O.'s and boards of directors are going to have to think very carefully about how they justify multimillion-franc compensation,” said the Swiss Social Democratic Party, which had supported the initiative. | “In the future, C.E.O.'s and boards of directors are going to have to think very carefully about how they justify multimillion-franc compensation,” said the Swiss Social Democratic Party, which had supported the initiative. |
| In March, Swiss voters approved by a wide margin an initiative that broadened shareholders’ power to limit executive pay. Popular support for the measure was perhaps surprising in a generally conservative country that has one of the highest standards of living in the world and unemployment of just above 3 percent. While Switzerland is not a member of the European Union or the euro zone, it has close ties to both. Still, its economy has been resilient despite the crisis surrounding it. | In March, Swiss voters approved by a wide margin an initiative that broadened shareholders’ power to limit executive pay. Popular support for the measure was perhaps surprising in a generally conservative country that has one of the highest standards of living in the world and unemployment of just above 3 percent. While Switzerland is not a member of the European Union or the euro zone, it has close ties to both. Still, its economy has been resilient despite the crisis surrounding it. |
| Switzerland also has a long history of social equality, and many citizens were offended by cases like that of Daniel Vasella, the former chief executive of the pharmaceutical company Novartis, who this year demanded a $78 million severance package in return for a promise not to share his know-how with any competitors. In the face of a public outcry, Mr. Vasella withdrew the demand and has since retired. | Switzerland also has a long history of social equality, and many citizens were offended by cases like that of Daniel Vasella, the former chief executive of the pharmaceutical company Novartis, who this year demanded a $78 million severance package in return for a promise not to share his know-how with any competitors. In the face of a public outcry, Mr. Vasella withdrew the demand and has since retired. |
| The image of Swiss business also suffered after the suicide in August of the chief financial officer of Zurich Insurance, Pierre Wauthier, who left a suicide note complaining of intense pressure to perform from the company’s chairman, Josef Ackermann. The Swiss authorities later determined that Mr. Ackermann, the former chief executive of Deutsche Bank, had not done anything inappropriate, but the episode fed perceptions that business leaders were pursuing profit at any cost. | The image of Swiss business also suffered after the suicide in August of the chief financial officer of Zurich Insurance, Pierre Wauthier, who left a suicide note complaining of intense pressure to perform from the company’s chairman, Josef Ackermann. The Swiss authorities later determined that Mr. Ackermann, the former chief executive of Deutsche Bank, had not done anything inappropriate, but the episode fed perceptions that business leaders were pursuing profit at any cost. |
| The 1:12 initiative was proposed by the youth wing of the Social Democratic Party and supported by the Green Party. As recently as October, the measure appeared to have a chance of passing, but support flagged during the last month in the face of determined opposition by business groups. | The 1:12 initiative was proposed by the youth wing of the Social Democratic Party and supported by the Green Party. As recently as October, the measure appeared to have a chance of passing, but support flagged during the last month in the face of determined opposition by business groups. |
| The Schweizerischer Gewerbeverband, a business group that led opposition to the measure, financed an advertising campaign that argued that approval would amount to the government’s dictating salaries. The group also argued that the measure would hurt tax receipts and lead to more bureaucracy. | The Schweizerischer Gewerbeverband, a business group that led opposition to the measure, financed an advertising campaign that argued that approval would amount to the government’s dictating salaries. The group also argued that the measure would hurt tax receipts and lead to more bureaucracy. |
| A poll conducted at the beginning of November on behalf of Swiss public television by Gfs.bern found that only 36 percent of those questioned were likely to vote for the measure, down from 44 percent a month earlier. The same poll found that 54 percent of voters surveyed in November were likely to vote against the measure, up from 44 percent a month earlier, when opponents and supporters were evenly divided. The rest were undecided. | A poll conducted at the beginning of November on behalf of Swiss public television by Gfs.bern found that only 36 percent of those questioned were likely to vote for the measure, down from 44 percent a month earlier. The same poll found that 54 percent of voters surveyed in November were likely to vote against the measure, up from 44 percent a month earlier, when opponents and supporters were evenly divided. The rest were undecided. |
| While a majority of those surveyed were in favor of limiting executive pay, according to the poll, many did not think caps should be imposed by the government. | While a majority of those surveyed were in favor of limiting executive pay, according to the poll, many did not think caps should be imposed by the government. |
| Mr. Kübler of the University of Zurich said he doubted that there would be further referendums on executive pay, but he predicted there would continue to be public pressure on corporations that were perceived to be acting irresponsibly. There is also a continuing debate in Parliament about how to put into effect the measure approved in March that expands shareholder powers. | Mr. Kübler of the University of Zurich said he doubted that there would be further referendums on executive pay, but he predicted there would continue to be public pressure on corporations that were perceived to be acting irresponsibly. There is also a continuing debate in Parliament about how to put into effect the measure approved in March that expands shareholder powers. |
| Supporters of pay limits said they would now turn their attention to a campaign to establish a national minimum wage of 4,000 francs, or $4,400, a month. Like Germany, Switzerland has no official minimum wage, although many workers are covered by union agreements. | Supporters of pay limits said they would now turn their attention to a campaign to establish a national minimum wage of 4,000 francs, or $4,400, a month. Like Germany, Switzerland has no official minimum wage, although many workers are covered by union agreements. |
| “I don’t think the debate about what corporations do and shouldn’t do is off the agenda,” Mr. Kübler said. | “I don’t think the debate about what corporations do and shouldn’t do is off the agenda,” Mr. Kübler said. |
This article has been revised to reflect the following correction: | This article has been revised to reflect the following correction: |
| Correction: November 28, 2013 | |
An | An article on Monday about Swiss voters’ rejection of legal limits on executive pay misstated the number of members of the Federal Council, Switzerland’s governing body. It has seven members, not eight. |