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03/05/2013

Swiss electorate vote to prevent golden handshakes

An angry Swiss electorate voted on March 3 to impose new laws aimed at curbing CEO salaries and preventing golden handshakes.

The legislation, which could take years to be implemented, takes the power of deciding executive compensation away from boards of directors and places it in the hands of public shareholders.

Signing bonues and golden parachutes to outgoing executives were also prohibited.

Failing to abide by these measures could result in three to six years jail time.

This move comes on the heels of the European Union’s decision, last week, to cap bankers bonuses.

Reducing top earners perks and salaries has become a huge issue in Europe as the eurozone struggles to keep economically viable.

Declining finances in many countries have resulted in policies of harsh austerity measures, or swift government cuts combined with tax hikes, in Greece, Spain, Italy, Britain and Bulgaria.

The say-on-pay movement is gaining ground as a popular initiative with the 99 per cent who feel the 1 per cent making top dollar should be somewhat punished for the 2008 market melt down.

As PricewaterhouseCoopers Jon Terry said from London, “It is only a matter of time before, globally, we have binding votes” on executive pay by shareholders of most public companies.

Swiss corporations did not react well to the news – five of Europe’s top 20 highest-paid CEOs work in Switzerland, Bloomberg reports.

Last month, Swiss residents were up in arms when it was disclosed Novartis was going to pay $78 million to outgoing chair Daniel Vasella to prevent him for working for another pharmaceutical firm.

Novartis withdrew the golden handshake.

With files from Bloomberg.

Tanya Talaga is the Star's Global Economics correspondent. Follow her on Twitter @tanyatalaga.

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