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Thread: Swiss vote for pay reform of company Execs. What practical impact will it have?

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    Politics.ie Member Sync's Avatar
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    Default Swiss vote for pay reform of company Execs. What practical impact will it have?

    Swiss vote for corporate pay curbs - FT.com

    Swiss vote to cap pay of top company executives - The Irish Times - Mon, Mar 04, 2013

    Executive life in Switzerland will soon be less lucrative after more than two-thirds of Swiss voted yesterday in favour of capping pay at listed companies.

    Some 68 per cent backed the so-called “rip-off initiative” in a referendum, giving shareholders a veto over salaries of managers and board members. New provisions, to be anchored in the Swiss constitution, will outlaw golden handshakes for arriving and departing managers, plus bonus payments for executives involved in mergers and acquisitions.
    Now this is a good thing. I believe shareholders should have an active role in voting for the pay levels of execs, and that re-electing directors on an annual basis is the correct position to be in.

    But what will this actually mean?

    • Golden Hellos are now illegal. So, I'm a US candidate that Nestlé want to hire on a 5 year contract. Prior to this vote they would have paid me $100k up front along with $100k per year. Nestlé still want to hire me. I still expect my $100k. So won't Nestlé just pay me $120k a year now? The practical benefit for the company is that people won't get paid before they've actually carried out any work. The drawback is that a very small number of people may pass up Swiss jobs because the benefit no longer exceeds the risk

    • Golden Handshakes are now illegal. So an increase in messy boardroom breakdowns, increase in court cases, increase in associated costs, delay in hiring in replacements as those in exisiting positions refuse to accept termination. Benefit would be increased transparency from those cases/public breakdowns.

    • Exec Pay must be voted on by shareholders, directors must be voted in annually: Most listed companies have a block of voters who hold many shares. Using Credit Suisse as an example, 50% of their shares belong to 9 parties.
      https://www.credit-suisse.com/govern...ignificant.jsp

      Those parties don't care about exec pay or directors as long as the companies performing for them. They're going to be less interested in "fair" pay as long as the results are right.


    It's a good thing, it realy is, I just don't see it as this revolution some are making out.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    Politics.ie Member greengoose2's Avatar
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    Unlike in Ireland, Fdi in Switzerland is the "cerise sur le gâteau". They are more concerned with the doings of Migros, Brown Boveri, Firmenisch and a raft of local stuff than the multinationals.

    The Swiss do not do revolutions. They mostly go quietly about their business and make sure that the ideals of 1291 are maintained.

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    Politics.ie Member southwestkerry's Avatar
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    yahoo Finance had the story yesterday. Good read but the main point their was CEO and pensions golden-handshakes. The kind that would put us in Ireland to shame I might add.
    swK
    A ship at harbour is safe but that is not what ships were built for.

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    Politics.ie Member Telemachus's Avatar
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    At least people are seeing how a real democracy works.

    Swiss referendum, 2013 - Wikipedia, the free encyclopedia
    ..the Irish nation can become other than white, by privileging the voices of the racialised and subverting state immigration but also integration policies. – Ronit Lentin

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    Could Ireland function without golden handshakes?
    I have no money, but I love my life.

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    Politics.ie Member Sync's Avatar
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    Quote Originally Posted by ShoutingIsLeadership View Post
    Could Ireland function without golden handshakes?
    I'd argue no business can to some degree. If your local building firm wants to fire their foreman due to lack of competence, they'll usually offer above statutory rates to get rid of them quickly and quietly, and bring someone in without damaging productivity. That's a golden handshake, just at a smaller scale.

    The same is true for a listed company. We want a new CEO. We have him waiting, but the old CEO won't leave, or is publicly insulting the company, or is suing, or is getting a union involved etc etc. Handshakes are a cost of doing business.

    The impact here of course is that shareholders know this. Some workaround will be found.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    Quote Originally Posted by Sync View Post
    I'd argue no business can to some degree. If your local building firm wants to fire their foreman due to lack of competence, they'll usually offer above statutory rates to get rid of them quickly and quietly, and bring someone in without damaging productivity. That's a golden handshake, just at a smaller scale.

    The same is true for a listed company. We want a new CEO. We have him waiting, but the old CEO won't leave, or is publicly insulting the company, or is suing, or is getting a union involved etc etc. Handshakes are a cost of doing business.

    The impact here of course is that shareholders know this. Some workaround will be found.
    Would payng out someone's contract not be the workaround, in the case of a corporate?
    I have no money, but I love my life.

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    Politics.ie Member Analyzer's Avatar
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    Any chance that it might see JP or Derek Quinlan rediscovering their long lost inner Irish PAYE taxpayer ?
    Coveney's ambition is the be Ireland's next EU Commissar and Ireland will pay a price as he builds his CV to position himself sufficiently loyal to the nEU empire.

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    Quote Originally Posted by ShoutingIsLeadership View Post
    Could Ireland function without golden handshakes?
    I think that you hit your Fingers on the button there.....
    Coveney's ambition is the be Ireland's next EU Commissar and Ireland will pay a price as he builds his CV to position himself sufficiently loyal to the nEU empire.

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    Politics.ie Member Sync's Avatar
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    Quote Originally Posted by ShoutingIsLeadership View Post
    Would payng out someone's contract not be the workaround, in the case of a corporate?
    Depends if that's the number you want. If I want to get rid of you and your contract's got $50k left on it but you want 100k to go away quickly and quietly, I now can't do that under Swiss law. So a result that gives both of you and the company a good result is no longer possible.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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