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article imageOp-Ed: Swiss reject exec. salary cap but worldwide problem needs fix

By Marcus Hondro     Nov 24, 2013 in World
A referendum to limit salaries of executives in Switzerland was soundly defeated in that country on Sunday but it's not an issue that's about to go away soon, there or elsewhere. Worldwide the overpayment of execs has gained the public's attention.
In Switzerland if a group can put together a petition with 100,000 signatures their proposal must go to a plebiscite; such votes are regularly held each year. The vote on limiting exec salaries was put together by the Green Party, student groups and labor union groups. Their proposal would have created a 1:12 ratio of pay, with executives at any firm not permitted a wage higher than 12 times the lowest salary at that firm.
Swiss vote fails to lower exec salaries
However, in a result hailed by the country's business community and by the right side of the country's political spectrum, along with the government, 65.3 percent of voters said 'no' to the initiative. In total, 53.6 percent of voters cast a ballot, considered a high referendum turnout; the turnout is more often under half.
Those groups opposed said the proposal would curtail the country's ability to continue to be competitive economically. The groups who supported it said fear tactics won the day for their opposition. They insist the money paid top executives has gotten out of hand and used the example of the chief executive of the pharmaceutical giant Novartis, who draws an annual salary 219 times greater than that of the company's lowest paid employees.
Agence France Presse (AFP) noted that at the Swiss banking group called UBS "...the lowest-paid employee would have had to work 194 years to make the same amount the head of its investment bank raked in in 12 months."
Executive compensation: overpayments abound
The gross overpayment of top execs is a widespread, worldwide problem. In the United States there have been efforts to curtail executive payments, the greater part of which often come from benefits such as stock options and bonuses, but it has yet to produce a significant result. In 2012, each of the Top 10 paid executives in that country were paid over $100 million.
File photo of a poster for the initiative requesting a yes vote  1:12  together for fair wages  atta...
File photo of a poster for the initiative requesting a yes vote "1:12, together for fair wages" attached to a lamp post in Eclepens, western Switzerland. The sign reads : "Wages : stop to excesses. 1:12 Yes November 24"
With permission by Reuters / Denis Balibouse
Second on the list was Richard Kinder of Kinder Morgan, who nabbed $1.16 billion and at the top was Mark Zuckerberg of Facebook who took home $2.27 billion in 2012. Each of those top 10 paid executives, incidentally, were white males and all but two were over 55, most over 60.
In Canada an example of executive overpayment is the B.C. Ferries Corporation and it is an example that shows the hurt it can cause. The corporation was created by the current Liberal government in 2003 as a hybrid public/private corporation to service the provinces ferry services. By creating such an entity, the government has been able to stand back and claim they're not responsible for the company's excesses.
At a time when ferry fares have risen dramatically, and services are being cut, B.C. Ferries paid former head David Hahn a $1 million buyout. In 2012 they paid CEO Michael Corrigan $563,000 while vice-presidents Robert Clarke and Glen Schwartz made $492,207 and $491,643 respectively. Meanwhile, services on some routes that will prevent workers from getting to work have been cut.
When companies like B.C. Ferry Corp. in Canada or Kinder Morgan in the U.S. or Novartis in Switzerland overpay to such a degree it prevents that company from paying fair wages to its employees and from saving the consumer money. The hardships it can cause farther down the food chain are real and severe and while Switzerland did not find a method of dealing with it this time, that country, and others, need to keep seeking a solution.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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