FacebookTwitterGoogle+RedditEmail

The Effects of the ‘Fat Cat’ Vote

by BINOY KAMPMARK

The soup is seldom eaten as hot as it is served.

Swiss expression, quoted by Philip Mosimann, CEO of Bucher Industries AG, Mar 5, 2013

They surprise and stun with a regularity that becomes them.  They might ban minarets after a referendum fearing the symbolic creep of Islam, but the citizens of Switzerland will also have a stab at controlling exorbitant payments to company executives if needed.  To be more precise, the March 3 referendum put to voters whether shareholders in public companies should have binding votes on pay that would effectively limit bonuses and payouts.  All 26 cantons agreed with the measure.  This is more impressive, given the financially minded nature of Swiss society.

The British will be particularly worried.  Chancellor George Osborne has been fighting a rearguard action against EU caps on bankers’ bonuses, giving credibility to the idea that any theft worth doing is worth doing well.  The Swiss have stolen a march and gone further than the EU.

The financial sector has been going about with a good bit of piffle – if you tax a banker, you are asking for trouble.  If you restrict vast payments to executives, you are giving them red cards.  They are the exceptional citizens who are to be given an open mandate on buccaneering, and Cameron’s government remains steadfast in opposing such moves.  To move in on their well earned “payments” will damage “the City”, which, in such circles, resembles a sacred totem.  The City of London has been doing its utmost best to attract high flyers from Wall Street and centres in East Asia with various packages with absurdly ludicrous packages.

The arguments against such restrictions were also trotted out by a strong lobby in Switzerland that evidently wasn’t strong enough. Economiesuisse argued that the proposals would impair competitiveness, encourage companies to offshore their operations and harm smaller companies, mustering together a campaign of fear to net a negative vote.  To help their case, a short film was commissioned, featuring Switzerland in a state of anarchy in the year 2026.  Naturally, it so happened to be ravaged by warring violence as well.  That, of course, had been because in 2013, its irresponsible residents had decided to impose the world’s tightest limits on executive pay. “It is a worst-case scenario,” suggested the film’s director Michael Steiner.  “Just to show what can happen if you make the wrong decision on laws governing the economy.”

Strong stuff, and so much so that Economiesuisse cancelled the release ahead of the March 3 referendum fearing a voter revolt.  That has not stopped their Cassandra-like worries.  A beast, they fear, has been born.

The campaign against such exorbitant bonuses and payments was given a considerable philippic by deals that almost brought Swiss bank UBS down.  Bankers had become speculators rather than caretakers.  Daniel Vasella also became a conspicuous target of public anger with an ill considered $78 million payment as chairman of Novartis, a delicious golden handshake if ever there was one.  His achievements included shedding thousands of jobs.

For all the huffing that has taken place in light of the campaign and the ‘yes’ vote, the effects of it are unlikely to be cataclysmic.  The question is whether it can be effective.  For such commentators as Alpesh Patel, working for the London based asset management group Praefinium Partners, such limitations can only get purchase if the scheme is made global (Euronews, 4 Mar).  Companies will move to areas of less resistance if encouraged.

It is unlikely that any exodus will take place.  Switzerland will retain a special place for the financial classes and companies seeking a base.  Executives will continue receiving high salaries, the only difference there being the role shareholders will play in the decisions.  And the government will have to enact legislation on the subject, a difficulty that no one is denying.  That process can be a lengthy one – politicians are still wondering how to implement the results of the 2010 plebiscite that considered expelling foreigners convicted of serious crimes (Business Standard, Mar 5).

What will change will be the innovative approaches taken to rewarding company executives.  Like thieves and code breakers, they will be one step ahead of the legislators.  Besides, there is nothing stopping shareholders from refusing to prevent high pay packages to executives.  “At the end of the day, shareholders will get more rights and the possibility to say ‘no’,” suggested Axel May, senior partners at Hostettler Kramarsch & Partner (Reuters, Feb 21).  “We have to see if they use that right.”  As Rolf Soiron, chairman of cement maker Holcim and drugs industry supplier Lonza explained to Reuters, “I think if a company wants to pay a top executive 25 million, then they will find a way to do so regardless of the initiative.”

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge.  He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

January 23, 2017
John Wight
Trump’s Inauguration: Hail Caesar!
Patrick Cockburn
The Rise of Trump and Isis Have More in Common Than You Might Think
Binoy Kampmark
Ignored Ironies: Women, Protest and Donald Trump
Gregory Barrett
Flag, Cap and Screen: Hollywood’s Propaganda Machine
Gareth Porter
US Intervention in Syria? Not Under Trump
L. Ali Khan
Trump’s Holy War against Islam
Gary Leupp
An Al-Qaeda Attack in Mali:  Just Another Ripple of the Endless, Bogus “War on Terror”
Norman Pollack
America: Banana Republic? Far Worse
Bob Fitrakis - Harvey Wasserman
We Mourn, But We March!
Kim Nicolini
Trump Dump: One Woman March and Personal Shit as Political
William Hawes
We Are on Our Own Now
Martin Billheimer
Last Tango in Moscow
Colin Todhunter
Development and India: Why GM Mustard Really Matters
Mel Gurtov
Trump’s America—and Ours
David Mattson
Fog of Science II: Apples, Oranges and Grizzly Bear Numbers
Clancy Sigal
Who’s Up for This Long War?
Weekend Edition
January 20, 2017
Friday - Sunday
Paul Street
Divide and Rule: Class, Hate, and the 2016 Election
Andrew Levine
When Was America Great?
Jeffrey St. Clair
Roaming Charges: This Ain’t a Dream No More, It’s the Real Thing
Yoav Litvin
Making Israel Greater Again: Justice for Palestinians in the Age of Trump
Linda Pentz Gunter
Nuclear Fiddling While the Planet Burns
Ruth Fowler
Standing With Standing Rock: Of Pipelines and Protests
David Green
Why Trump Won: the 50 Percenters Have Spoken
Dave Lindorff
Imagining a Sanders Presidency Beginning on Jan. 20
Pete Dolack
Eight People Own as Much as Half the World
Roger Harris
Too Many People in the World: Names Named
Steve Horn
Under Tillerson, Exxon Maintained Ties with Saudi Arabia, Despite Dismal Human Rights Record
John Berger
The Nature of Mass Demonstrations
Stephen Zielinski
It’s the End of the World as We Know It
David Swanson
Six Things We Should Do Better As Everything Gets Worse
Alci Rengifo
Trump Rex: Ancient Rome’s Shadow Over the Oval Office
Brian Cloughley
What Money Can Buy: the Quiet British-Israeli Scandal
Mel Gurtov
Donald Trump’s Lies And Team Trump’s Headaches
Kent Paterson
Mexico’s Great Winter of Discontent
Norman Solomon
Trump, the Democrats and the Logan Act
David Macaray
Attention, Feminists
Yves Engler
Demanding More From Our Media
James A Haught
Religious Madness in Ulster
Dean Baker
The Economics of the Affordable Care Act
Patrick Bond
Tripping Up Trumpism Through Global Boycott Divestment Sanctions
Robert Fisk
How a Trump Presidency Could Have Been Avoided
Robert Fantina
Trump: What Changes and What Remains the Same
David Rosen
Globalization vs. Empire: Can Trump Contain the Growing Split?
Elliot Sperber
Dystopia
Dan Bacher
New CA Carbon Trading Legislation Answers Big Oil’s Call to Continue Business As Usual
FacebookTwitterGoogle+RedditEmail