‘No money, no Swiss,’ the saying goes, and un-paid Swiss mercenaries could drop their unreliable employer at the drop of a hat. Switzerland was something of a military super-power in the 15th and 16th centuries, known for its hard-fighting mercenaries. They were guarding the French king, Louis XVI, at the time of the French Revolution, and were massacred on August 10, 1792, when the mob attacked the Tuileries Palace, although the king had already fled. The only left-over of this largely forgotten period are the Swiss guards for the Pope in the Vatican.
At the beginning of March, Switzerland was in the headlines of the media around the world, hailed in neighbouring France as a model: a rare event. The Swiss had just massively (67.9%) voted to limit top manager’s pay. It was called the ‘people’s initiative against fat-cat pay’. The measure requires that listed companies offer shareholders a binding vote on senior managers’ pay and appointments at each annual general meeting. The penalty for bosses who fail to comply is up to three years in jail or the forfeit of up to six years’ salary. ‘Switzerland’s penchant for direct democracy has trumped its tolerance for tycoons,’ said London-based ‘The Economist’.
The initiative is the brainchild not of some Marxist extremists, but of a German-speaking head of a family business in Schaffhausen, Thomas Minder. A maverick member of the Swiss parliament, he fought the campaign more or less alone, without the backing of any of the major parties. He never forgave Swissair for backing out of a contract when it went bankrupt 12 years ago and then awarding its former boss a big pay-off. His campaign received a major shot in the arm at the last minute when Novartis, a major Swiss drug firm, announced that it was paying its departing chairman, Daniel Vasella, a severance package of SFr72m ($76m). After an uproar in the media, Vasella later refused the package.
Now it will become harder to extend such corporate generosity. Shareholder votes on executive pay, hitherto ad hoc and advisory, will become routine and binding. Pension funds will be required to vote in the interests of their members and make their votes public. Board members will not be permitted to have consulting or other contracts with firms in the same group.
As controversy continues over the undeclared Swiss bank accounts of leading French and German public figures, it is nice for us to be able to show that many Swiss share a concern for ethical standards and a longing for greater transparency and accountability. Pascal Lamy, the outgoing head of the World Trade Organization talked in a recent interview about ‘the problem of those, who like himself, criticize market capitalism and deplore its failings, its instabilities, its inequalities and the damage that it does to the environment, but have yet to find the credible winning formula to put it its place’.
So the search for a better way is on. And perhaps part of the answer both for capitalism and democracy lies in the recognition of the fact that both are eternally perfectible systems. So perhaps we need not ONE answer, but many more Minders. ‘Calvin must be rejoicing in heaven,’ one blogger commented.