Some of Switzerland’s biggest listed companies could leave the country if a referendum on executive pay goes against them, business lobby group Economiesuisse and the head of the stock exchange have warned.
Swiss stock exchange CEO Christian Katz has joined Economiesuisse in warning that big listed firms might move their headquarters out of Switzerland if the initiative tabled by MP Thomas Minder is adopted in a referendum in March.
“We understand that certain listed companies are considering the possibility of moving their headquarters in the event the Minder initiative is accepted and, hence, the regulatory environment worsens,” Economiesuisse said. Katz has made similar remarks.
Indeed, the chairman of one those firms, food giant Nestlé, has gone public with his opposition.
“If this grassroots initiative were adopted, Switzerland would, for no reason, give up one of the finest corporate governance systems in the world,” wrote Peter Brabeck-Letmathe in the Neue Zürcher Zeitung recently.
He added: “No well-advised company would then ever think of domiciling in a place where the violation of new corporate governance rules would mean jail for up to three years.”
It comes as a new poll showing that support for the measure is waning. Less than six weeks before the vote on the measure, which would oblige shareholders to vote annually on executive pay at listed firms and make those votes binding, the poll in the Blick newspaper shows 54%support – against 77% in favour last summer.
The poll has been accompanied by the sudden appearance of signs in the major cities urging voters to “look at the fine print”. A website goes on to explain why it will hurt Swiss business.
“Certain listed companies are considering the possibility of moving”
The business community’s campaign has not only affected the polls but also the morale of the initiative’s proponents. Minder’s deputy, Claudio Kuster, lamented via Twitter that the reported CHF8m (€6.4m) being spent by the business community was undermining their efforts. “Oh no! Only 54% for and 30% against – what a catastrophic poll in Blick,” he tweeted.
Should the proposal be rejected on March 3, a counter-proposal from the parliament is to take effect. This would permit shareholders to decide which votes on executive pay are binding and which are not.
This compromise is supported both by pension fund association ASIP – which worries that Minder would drive up their members’ costs – and Ethos, the corporate governance advisor that has been as critical of “fat cat” pay as Minder himself. Ethos has argued repeatedly that the counter-proposal is superior to Minder’s, as it permits shareholders to vote over the entire compensation structure for executives.