The Swiss government has dropped a bombshell on the architects of the so-called Minder initiative on executive pay by allowing Swiss pension funds to circumvent the initiative’s voting requirements.
In its original form, Minder requires Swiss schemes to vote on executive pay at investee companies during annual general meetings (AGM) and then inform their beneficiaries on how they voted. The initiative was approved by a huge majority in a referendum on March 3.
Yet according to the draft law implementing the measure, funds will be given the right to not vote or abstain, “should this be in the interests of the insured.” The draft from the justice ministry goes on to say that it will be the schemes’ management that will define what those interests are.
“We are completely shocked and outraged,” said Brigitta Moser-Harder, one of the architects of the Minder initiative. She told RI: “We will now fight for the provision to be removed from the law, but I expect it to be a hard fight.”
The initiative’s other architects are Thomas Minder, the small businessman-turned-upper house MP after whom it is named, and Claudio Kuster, who is secretary of the initiative, which is known officially as the “Initiative Against Rip-Off Artists.”
Kuster was equally outraged. In an e-mail to RI he said: “In the six years that we pushed for the initiative, we always assumed there would be a voting requirement for occupational pension funds and the government’s first pillar scheme (AHV). Very little of that is left.”The draft law now goes to Switzerland’s parliament for debate and approval. It is to come into force on January 1, 2014. Moser-Harder said that while the Swiss Social Democrats backed Minder in its original form, it did not command a majority in the parliament. “We face stiff resistance from the Conservative and Liberal parties,” she said.
“We will now fight for the provision to be removed from the law”
Swiss pension fund association ASIP, which staunchly opposed Minder before the referendum, said that it was not involved in the draft law process. However, in the run-up to the bill, “we did speak out against the voting requirement and made clear that such a waiver can be in the interests of the insured,” said Hanspeter Konrad, managing director of ASIP. Konrad added that in ASIP’s view, the draft law on Minder was a “workable solution” for its members. ASIP represents around 2,500 schemes that hold CHF550bn (€446bn) in assets.
ASIP’s campaign to get maximum flexibility for its members was already in full swing two months ago, when it called for exempting them when they invest in equity funds. Its president, Christoph Ryter, also complained that the schemes, unlike other institutional investors such as insurers or sovereign wealth funds, had been unfairly singled out.