Monday, 25 March 2013

"They'll just move to Switzerland..."

It's been a popular refrain of opponents of pay restraint for high earners in the City that if we put too much pressure on the 'talent' will leave the UK to work somewhere that really values them. For a long time Switzerland has been one of the places highlighted as the destination of those taking part in a future tax exodus (movement of ok yah people).

Obviously the success of the Minder Initiative has put a slight dent in this. The Swiss public apparently aren't any more convinced than their counterparts here that our corporate leaders can't cope with a little austerity of their own. As a result of Minder's campaign, Swiss companies will have to introduce a binding shareholder vote on pay, and there will also be a ban on golden hellos/handshakes. This goes a little bit further than the UK's regime, though still is very much within mainstream corporate governance territory.

But it isn't over yet. The youth wing of Swiss Social Democratic Party is now putting forward its own proposal to limit internal company pay ratios to... ahem.... 12:1. This is so no-one earns more in a year than anyone else in the same firm earns in a year. Apparently initial polling suggests that almost half the Swiss public like the idea. Needless to say, if enacted this would a pretty serious shift, I can't imagine the Swiss business community or Swiss shareholders liking this one bit. But that's the Swiss political system for you.

It also shows just how far the mainstream of corporate governance opinion is from public opinion on executive pay. I personally think that, unless this gap is addressed, exec pay is the issue that undermines a lot of what we currently take for granted in corp gov land.

And you bankers out there had best put off buying those tickets eh?

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