Swiss Pay Curbs Inspire Leaders Abroad

[HuffingtonPost]

By Erik Kirschbaum                

BERLIN, March 4 (Reuters) - A Swiss decision to impose tough  new controls on executive pay could encourage other European  countries to follow suit, with political leaders in Germany and  France voicing support for  compensation rules modelled on those  of their smaller neighbour.                

"The Swiss often show the way and personally I think we  should take inspiration," French Prime Minister Jean-Marc  Ayrault said on Monday, a day after Swiss citizens voted in a  referendum to give shareholders veto rights on pay and ban big  rewards for incoming and outgoing managers.                

Rainer Bruederle, parliamentary floor leader for Germany's   ruling Free Democrats (FDP), also backed the Swiss move, saying  politicians in Berlin should "set an example" and enact similar  rules before a Sept. 22 federal election.                

He was supported by Justice Minister Sabine  Leutheusser-Schnarrenberger, who said she would examine whether  and how shareholder rules could be improved.                

Chancellor Angela Merkel's spokesman was more circumspect,  saying her preference was for European Union-wide rules on  executive pay.                

"It's not right to go off nationally alone on something like  this in an economy with international links but rather to pursue  it in a larger European context," Steffen Seibert said.                

The issue of executive pay has been a hot topic in Germany  since the 2008-2009 financial crisis led to taxpayer bailouts of  banks and governments. It could be a key issue in the looming  election, where Merkel will be seeking a third term, and is  fighting off accusations from the opposition Social Democrats  (SPD) that she has been too lenient on bankers.                

Merkel is a strong defender of the post-war "social market  economy" model, which discourages a big gap between the wages of  assembly line workers and executives in the boardroom. But  income inequality has risen on her watch.                

Joachim Poss, a deputy parliamentary floor leader for the  SPD, backed the Swiss move and said rules in Germany must  change.                

"The current rules are not strong enough for the fight  against the excessive executive pay," Poss told Reuters.  "Experience has shown that voluntary measures don't work."                

Swiss citizens voted on Sunday to impose some of the world's  strictest controls on executive pay with an overwhelming 67.9  percent backing, forcing public companies to give shareholders a  binding vote on compensation.                

The measure received one of the highest approval rates ever  for a popular initiative.                

While anger at multi-million dollar payouts for executives  has spread around the globe since the financial crisis, Swiss  direct democracy - including four national referendums in a year  - means public outrage can be translated into strong action.                

Brussels agreed a cap on bankers' bonuses last week and  countries including the United States and Germany have  introduced advisory "say on pay" votes. Britain also wants to  give shareholders a binding vote on pay and "exit payments" at  least every three years, but the Swiss plans go further.        (Additional reporting by Leigh Thomas in Paris; Editing by Noah  Barkin and Peter Graff)

Via: HuffingtonPost