Some 67.9 per cent of voters backed the “Rip-Off Initiative”, with 32.1 per cent against, the government said.
While anger at multi-million pound payouts for executives has spread around the globe since the financial crisis, Swiss direct democracy – including four national referendums a year – means public outrage can be translated into action.
A few other countries, including the United States and Germany, have introduced advisory “say on pay” votes, and Britain is also planning to give shareholders a binding vote on pay and “exit payments” at least every three years. Brussels agreed a cap on bankers’ bonuses last week.
The clear majority in Switzerland was unusual given fierce opposition and intense campaigning by business lobby group Economiesuisse, which warned the proposals would damage the country’s competitiveness and scare away international talent.
Support for the move was driven partly by big bonuses blamed for fuelling risky investments that nearly felled Swiss bank UBS, as well as outrage over a proposed £52 million payment to outgoing Novartis chairman Daniel Vasella.
“The clear support for the initiative reflects the understandable anger of the electorate at the self-serving mentality of certain managers,” said a group representing most of the parties in parliament which opposed the plan.
Thomas Minder, the businessman-turned-politician behind the campaign who says his proposals are aimed at ending a culture of short-termism and rewards for managers of badly-run companies, said intense corporate lobbying had backfired. “This is a clear sign of the distance between the people and the political and business establishment,” he said.
Despite threats from some executives, Switzerland is unlikely to see an exodus of big companies, drawn to the country by low taxes, stable politics and business-friendly laws.
Activist shareholder group Actares welcomed the result of the referendum: “Actares is convinced that the electorate has improved Switzerland’s position as a place to do business by strengthening shareholders’ rights.”
Of the top 100 Swiss companies, 49 already give shareholders a non-binding vote on the pay of executives. But while opposition to pay deals is on the rise, a majority of investors have never voted them down.
Swiss companies employed five of the top ten best-paid chairmen in Europe in 2011, but only the heads of Novartis and Roche made it into the continent’s top ten for chief executives.
Mr Minder’s initiative forces binding votes on compensation every year as well as on board composition and would also ban bonus payments to managers if their companies are taken over.
While Switzerland has fared relatively well through the financial crisis, the government bailout of flagship bank UBS in 2008 stoked anger among Swiss who blamed its heavy losses on rewarding bankers.