Management Compensation in Switzerland: Say-on-Pay Votes, Bonus Bans, and Salary Caps

Abstract:

This article discusses two rather recent developments concerning the regulation of managerial compensation in Switzerland: the Swiss voters’ acceptance of the initiative “against abusive remunerations” on 3 March 2013 and the Swiss voters’ rejection of the so-called 1:12 initiative on 24 November 2013. Many international commentators have argued that Switzerland has imposed one of the most restrictive manager pay regimes of the world and has therefore become a much less attractive place to do business. In my article, I challenge this view by closely examining the relevant rules on say-on-pay votes, bonus bans, and salary caps. I conclude that the new Swiss rules on management compensation are not as interventionist as they are sometimes thought to be and Switzerland’s liberal economic spirit and dedication to free market economic ideals is still alive and well.