Imane Kurdi Bravo Switzerland, not its politicians, nor its government, not its banks or its big pharmaceutical companies, but its people. Last Sunday they voted overwhelmingly across the country's 26 cantons, even in, particularly in, Zurich where polling booths stayed open late to allow citizens to have their say, to put a stop to obscene executive bonuses. Others have suggested, threatened, wished, but Switzerland has done – or will do; the vote now requires the Swiss government to draft and pass a law to implement it. So what did they vote for? For what you and I and every sensible person who is not a banker or at the pay of a banker would have voted for long ago: no more golden helloes, no more golden parachutes, no more bonuses linked to merging your company with another and a binding vote on executive pay by shareholders, who are, let's remember, the people who actually own the company. Who would have thought the Swiss, reportedly so calm, measured and placid, would have been the ones to translate anger into action? For a while now there has been growing anger across Europe at the excesses of executive pay, particularly bankers pay. The feeling is that bankers through their greed and recklessness brought on the financial and economic misery faced by most of Europe today. The banks were bailed out because governments decided they could not afford to let them fail. Huge sums were given, the banks recovered and bankers are once again earning huge salaries when ordinary people are still paying for their mistakes. What is more, bank executives continued to award themselves high bonuses even when their banks were making losses. In short, everyone else paid but them; is it any wonder the people are angry? For a long time it seemed bankers could get away with anything. They could certainly get away with paying themselves wages that beggared the belief of ordinary people; for doing what exactly? There is a logic in someone who has talent earning big money as a result of that talent, be they a footballer, a singer or an actor. There is logic in someone who builds something, who takes a risk, getting a return on that investment, on that risk. But bankers, traders in particular, are seen as people who play with other people's money. Perhaps the day of reckoning has come. Last week the European Union, as part of its overhaul of the banking sector, voted to cap executive bonuses at a maximum of one year's salary, extendable to two year's salary if approved by shareholders. And now the Swiss referendum. In this instance the straw that broke the camel's back was not linked to a banker but to a pharmaceutical giant, Novartis. The company awarded Daniel Vasella, its former chief executive, 15 million Swiss francs in 2011 and a whopping 72 million Swiss francs golden parachute to stop him working for anyone else for the next six years. This raised a massive outcry in Switzerland, so much so that Vasella and Novartis decided to scrap the six-year payout, but the damage was done. The referendum was brought on by Thomas Minder, a Senator and former businessman. It did not have the support of the Swiss government, nor of the upper parliament. Capping top pay is bad for business the argument goes, companies will relocate elsewhere and the economy needs these people. Wrong. Economies need entrepreneurs. They need people who create wealth and employ people. They need banks that lend to businesses small and large, that give mortgages and loans to individuals who have stable incomes, who invest in projects and infrastructure. What they don't need are elite clubs who hoard wealth and act with impunity. The Swiss are sensible people. They know that wealth and wealthy people are an asset to an economy. This referendum has nothing to do with envy and everything to do with reason. It says first and foremost that pay should be set not by those whose pockets will be lined but by those whose pockets the money will come from: the shareholders. It also injects a sense of responsibility into a world that has lost its sense of proportion. When executives consider it normal to earn hundreds of times more than the salary of the lowest paid worker in the company, is it not time for someone to step in and say: hello, is this reasonable and justified? It shifts responsibility away from executives who quite naturally look out for their own self-interests and it establishes safeguards to ensure that banks and companies take a longer term view. Golden parachutes exist for a good reason: to protect a company from losing out to its competitors when those with inside knowledge leave, but they have gone out of control, as have the sums involved in bonuses. It is high time more stringent checks and balances were put in place. The Swiss have taken the lead, let's hope that others follow. — Imane Kurdi is a Saudi writer on European affairs. She can be reached at [email protected]
