CEO Compensation: The Swiss Experience

By Bhavani Prakash

A very interesting story that emerged from last month’s Singapore Human Capital Summit 2013 was the one recounted by Dr Erich Hunziker, Chairman of BB Biotech.  He observed how business and society had co-existed and cooperated well till the 1980s and 1990s in a more or less egalitarian way, until the American values of ‘hiring and firing’ as well as oversized and unjustified CEO compensations came to Switzerland, throwing the salary system well out of balance.

Dr Erick Hunziker at SHCS 2013

 

 

 

 

 

 

 

 
 

 

 

To cut a long story short, Swiss society started asking serious questions when public funds were sought to bail out big banks during the financial crisis, and that CEOs of companies were entitled to huge severance packages.

A very interesting legislation in Switzerland is really worth sitting up for and taking notice of.  If you can canvas 100,000 signatures from civil society, you can actually force a vote in parliament.  Thomas Minder, a UBS shareholder managed to do this within two months of storming out of a UBS shareholder meeting protesting against the sum lost during the subprime mortgage crisis.

Switzerland now empowers shareholders to “a binding vote on all executive pay packages at public listed companies. In addition, it forces annual elections to the board, obliges pension funds to vote ‘in the interest of their members’ and make their vote public, prevents golden goodbyes or ‘parachutes’. Infrigement of these rules could be punished by three years in jail or a fine equivalent to six years of compensation.” (Details from France 24)

It’s great to see a country like Switzerland place priority on values in CEOs such as trust, credibility and humility instead of self-aggrandisement.  Dr Erich Hunziker himself seemed to epitomise that in his opening question – what is a company (or CEO) for?  He replied that it was to serve one’s customers and treat one’s employees as talent,  in a way that activates his or her potential.

In the EU, the parliament has agreed to put a cap on bonuses at employee’s base salary.

Recently this month,  120,000 Swiss signatories have signed a petition to demand a minimum wage of $2,800 as compared to an amount of $1500 earned by a US fast food worker.

To quote Enno Schmidt, Founder of the Basic Income Initative,

” It could one of the landmark historical moments, like the abolition of slavery, or the civil rights movement- of course, those who don’t want it will find excuses, but those who do want it will find solutions.” 

 

About the Writer:

Bhavani Prakash is the founder of Green Collar Asia, a thought-leadership portal on developments in the green jobs sector, where macro-level trends, as well as insights from green professionals and entrepreneurs are brought together. Green Collar Asia is the media division of Worthy Earth, a media, recruitment and training firm.

Bhavani is a speaker, trainer and writer in the environment/sustainability sector. She has an MBA (PGDM) from Indian Institute of Management Calcutta and an M.Sc in Financial Economics from University of London. She is also a certified EQ Coach with Six Seconds.org

Connect with Green Collar Asia on LinkedIn, Facebook and Twitter. Bhavani Prakash may be contacted via bp[at]greencollarasia.com or through LinkedIn

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