SWITZERLAND/UNITED KINGDOM: Hedge fund boss says Swiss 'bonus referendum' will only spark exodus of high-paid

Record ID: 862775

  • Title: SWITZERLAND/UNITED KINGDOM: Hedge fund boss says Swiss 'bonus referendum' will only spark exodus of high-paid
  • Date: 4th March 2013
  • Summary: NEWSPAPER HEADLINES PROCLAIMING VICTORY OF 'YES' VOTE
  • Embargoed: 19th March 2013 12:00
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  • Location: United Kingdom
  • City:
  • Country: United Kingdom
  • Topics: Economic News,Politics
  • Reuters ID: LVAAYJBNIYYBAT8HWI6P8S1RZJZI
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  • Story Text: The result of a Swiss referendum on executive pay will encourage an exodus of highly-paid financial sector workers, an analyst said on Monday (March 4) after Swiss citizens voted to impose some of the world's strictest controls on executive pay, forcing public companies to give shareholders a binding vote on compensation.
    The government said 67.9 percent of voters had backed allowing shareholders to veto executive pay proposals as well as banning big rewards for new and departing managers, one of the highest approval rates ever for a popular initiative.
    Founding partner of Hedge Fund Praefinium Partners Alpesh Patel said the controls must be uniform world-wide for them to be fully effective, saying the move would cause an already ongoing exodus of big companies out of Switzerland.
    "In terms of exoduses, outside of places and small countries like Switzerland, what I've actually seen over the last few years is that all the people who have moved to places like Switzerland -- because they were being offered by the individual cantons a rather good tax deal, or Monaco, for instance -- have decided actually they rather quite like the culture and vibrancy of larger cities like London and have been actually returning well before any of these kinds of bonus limits," he said.
    "I think this would just be the tipping point to encourage them back to cities and places with a bit more life than places like Switzerland."
    The result of the referendum was welcomed on the streets of Geneva.
    "The initiative is efficient but it won't come into effect immediately, unlike a law," said one passer-by.
    "I think they're overpaid and at the same time, their bonuses are too much. One must think of others who aren't able to earn enough," said another.
    Brussels agreed a cap on bankers' bonuses last week and countries including the United States and Germany have introduced advisory "say on pay" votes. Britain also wants to give shareholders a binding vote on pay and "exit payments" at least every three years, but the Swiss plans go further.
    Thomas Minder, the businessman-turned-politician behind the campaign who says his proposals are aimed at ending a culture of short-termism and rewards for managers of badly-run companies, said intense corporate lobbying had backfired.
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