October 8, 2014
By Jessica Wilson, BioSpace.com Breaking News Staff
Ethos, the Swiss Foundation for Sustainable Development, today released its annual survey of executive pay. According to the report, Severin Schwan, chief executive officer of Roche , is still the best-paid Swiss executive, with $14 million total compensation last year. Joseph Jimenez, CEO of Novartis , also sits at the top of the list.
“Double-digit sums are difficult to accept in a Swiss environment,” Dominique Biedermann, director of Ethos, told reporters at the briefing for the report, according to Bloomberg. “The Swiss people have voted and said such compensation doesn’t go anymore.”
Biedermann is referring to a referendum passed by Swiss voters, informally referred to as the “fat-cat initiative,” to give investors greater control over setting, or limiting, the salary of executives. Bloomberg reported that, “Ethos said today...the initiative, which was proposed by Thomas Minder to eliminate sign-on bonuses, severance packages, and extra incentives for merger transactions, has had some impact, causing companies to become more transparent regarding remuneration.”
In addition, Swiss Info, the Swiss news outlet, reported that the average salary of executives climbed only 2% between 2012 and 2013. The news source explained the significance of the 2% figure: “This meant that top managers’ earnings grew less than their companies’ stock prices and profits. In the financial sector alone, manager salaries increased just 8% even though profits doubled between 2012 and 2013.”
Ethos Deputy Director Vincent Kaufmann, who will take over from Biedermann, claimed that though the average pay of all Swiss executives has remained “fairly stable,” more work needs to be done with regard to transparency.
Kaufmann expressed concern that certain policies companies are adopting could be side stepping the spirit of the referendum. According to Swiss Info, “Almost half of the firms surveyed had included the possibility in their articles of association to replace ‘golden parachute’ exit bonuses – banned under the initiative as of 2015 – with ‘non-compete’ packages that are paid out if a departing executive promises not to work for a competitor.”
Kauffman said that one way a company could demonstrate that it was acting in the spirit of the “fat-cat initiative” would be to make transparent the non-compete clauses in the contracts of executives—before the company makes use of these clauses.
Reports by Ethos wield a great deal of influence in the country because the foundation provides investment advice to more than 140 Swiss pension funds and charitable trusts.
