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The business groups also argued that letting voters decide technical corporate governance rules would discourage companies from remaining in Switzerland, as they would have no way of knowing what unsophisticated voters would come up with next.
That’s not a bad argument, and prospects of passage were far from certain early last year — until a financial blogger wrote that Novartis AG was planning to pay outgoing Chairman Daniel Vasella up to $78 million to not consult with competitors in his retirement.
In the ensuing uproar, Vasella said he would give away the money and then said he didn’t want it at all. An official from the business group EconomieSuisse later told a national TV audience that after the Novartis news broke, “it became impossible to return to a reasonable debate.”
The Swiss voters weren’t stupid. What was paying any executive up to $78 million to not work if it wasn’t a ripoff?
Two-thirds of the voters approved Minder’s initiative.
The Swiss corporate community subsequently downplayed the effect it would have, but word of the referendum’s passage reached the offices of U.S. companies now registered in Switzerland, including Pentair of Golden Valley.
Pentair this spring sought, and received, shareholder approval to pick up and move its formal headquarters from Switzerland to Ireland.
In Pentair’s filings, it noted that it might save money on taxes. But its move was not really about that. It was about the prospect of another Thomas Minder coming along championing a referendum initiative, a prospect it called “unpredictability in the Swiss legal system.”
Pentair’s filing said its board made a decision to recommend moving to Ireland in December, and by then there had been another referendum in Switzerland, the so-called 1:12 initiative. It would’ve capped executive compensation at 12 times the lowest paid employee.
The Swiss may have been disgusted by excessive executive pay, but they were unwilling to go that far. The initiative was decisively defeated.
Minder, by the way, was not a proponent of capping or reducing CEO pay.
“I just want shareholders to take responsibility for the levels of remuneration,” he said. “If the shareholders want to waste company money by paying exorbitant amounts, that’s their problem.”