Swiss vote for pay limits won’t matter

Some say it’s akin to allowing a tabloid newspaper dictate the legislative agenda. Others that it’s true democracy at work. Whatever it is, Switzerland’s use of referenda produces quirky results at times. And it’s now given birth to a seemingly radical vote to let investors veto executive pay proposals and vet appointments to companies’ boards.

The direct democracy system lets voters have a popular vote – and the results  have to be heeded by lawmakers. It  means issues that  would  not get on to the public agenda elsewhere can get vigorously debated in Switzerland. With offbeat, even controversial results – three years ago the Swiss voted to ban the building of new minarets on mosques.

But is it so radical? Backers of the latest referendum believe it  means an end to alleged  corporate largesse. And that it could be followed by similar action elsewhere – such as in Britain where bankers’ bonuses are widely attacked in the press.  For  Swiss executives it may mean no more so-called golden hellos, goodbyes, handcuffs or other payments when they leave or arrive at a company. Investors will have a say on executive pay and could even vet board appointments at companies.

This will take years to enact, however, perhaps even a decade. Critics say  Switzerland will lose its reputation as a home for multinationals, making it a self-inflicted wound for a business-friendly country.

I don’t agree.  There are already experts out there at the big accountancy firms running rings around tax laws. Ways will similarly be found around any new Swiss investor rights laws. Plus, moves are already afoot elsewhere in Europe to clamp down on bonuses, particularly those in the financial sector where lawmakers see easy political targets in the shape of the bankers who brought their own businesses and European economies to the brink of ruin.

So while Swiss referenda give citizens a sense that they’re really influential in the national political set-up, they’re actually moving somewhat more slowly than Brussels. And, in any case, while individuals may get angry enough to vote one way or the other top fund managers are not going to display populist tendencies. They will vote in the interests of their huge pension fund clients.

The Swiss have world-beating companies – in banking, luxury goods, chemicals and pharmaceuticals. It will take a lot more than some  law on executive pay  to damage the country’s reputation as a bastion of corporate friendliness.