Ten years ago, the people said yes to the rip-off initiative. Since then, shareholders have had the say in remuneration. Mostly they vote in the sense of the bosses.
Ten years ago, the managing directors of the 50 largest Swiss companies earned an average of 4.3 million Swiss francs. Today it is 5.1 million francs. Anyone who believed that the rip-off initiative would lead to lower executive salaries was wrong.
For the presidents of the board of directors, on the other hand, the salary has fallen from 1.7 million to 1.3 million today. Salaries have remained roughly the same across all management and board members. And: there are no more outliers with earnings in the high double-digit millions.
Wages are more to the gusto of the owner
The figures come from remuneration expert Stephan Hostettler. However, the development is not solely due to the acceptance of the initiative, he says.
A good 50 percent of CEO remuneration is not paid out immediately, but takes up to five years. Depending on whether the performance was good or not.
Certainly, the people’s yes ten years ago meant that remuneration at large companies is now more strongly geared towards the interests of shareholders. «A good 50 percent of CEO remuneration is not paid out immediately, but takes up to five years. Depending on whether the performance was good or not,” explains Hostettler.
This is exactly what the initiative was about: Shareholders, i.e. the owners of the companies, should vote on the remuneration every year. As a rule, they wave it through with well over 90 percent approval.
Transparency leads to higher wages
In addition, listed companies have to disclose the remuneration. That was the case before Minder – but since then the requirements for transparency have increased again.
However, more transparency means that wages are adjusted upwards, says compensation expert Urs Klingler.
Klingler warns against hitting all companies with the same bar. The differences are considerable. The highest-earning chairman of the board of directors of all companies listed in the Swiss Performance Index receives 345 times more than the chairman with the lowest salary. For the managing directors, this ratio is 1:125.
The horror scenario did not materialize
And what does Thomas Minder, the man who launched the initiative, say? He sees it as a success that annual salaries of 20 or 30 million francs are off the table, as are advance payments and severance payments for managers – such are prohibited.
And: «The horror scenario, according to which Switzerland would go under and companies would move away, did not happen. The opponents from back then would have to admit that today,” says Minder.