In February 2008, Thomas Minder, a Swiss businessman whose family owned company is best known for its old-fashioned herbal toothpaste, attacked his banker, UBS chairman Marcel Ospel, as if he were a form of stubborn plaque.
At a shareholders’ meeting in Basel, he stormed the podium as Mr. Ospel addressed the crowd. Mr. Ospel’s bodyguards grappled with Mr. Minder and wrestled him away before he could land his symbolic blow – he was trying to hand the embattled head of Switzerland’s largest bank a bound copy of Swiss company law, which codifies corporate temperance.
“Gentlemen, you are responsible for the biggest write-downs in Swiss corporate history,” Mr. Minder had railed just a few minutes before, referring to UBS’s loss of $50-billion during the subprime meltdown that prompted it to seek a government bailout. “Put an end to the Americanization of UBS corporate philosophy!”
The bodyguards marched Mr. Minder out of the hall amid a chorus of boos and jeers. Two months later, Mr. Ospel was gone, taking the fall for UBS’s recklessness, but Mr. Minder’s campaign against big bonuses had only just begun; shortly after Mr. Ospel was ousted, Mr. Minder filed the 100,000 signatures needed to launch a referendum to impose some of the tightest controls on executive compensation in the world.
Of the top 100 Swiss companies, 49 give shareholders a consulting vote on the pay of executives. A few other countries, including the United States and Germany, have introduced advisory “say on pay” votes in response to the anger over inequality and corporate excess that drove the Occupy Wall Street movement. Britain is also planning to implement rules in late 2013 that will give shareholders a binding vote on pay and “exit payments” at least every three years. Mr. Minder’s initiative goes further, forcing all listed companies to have binding votes on compensation for company managers and directors, and ban golden handshakes and parachutes. It would also ban bonus payments to managers if their companies are taken over, and impose severe penalties – including possible jail sentences and fines – for breaches of these new rules.
Despite strong opposition from the business elite, Mr. Minder’s initiative is given a good chance of passing when it goes to a vote on March 2. Even if his referendum fails, the country will automatically adopt a counterproposal put forward by parliament that would compel companies to hold votes on executive pay, although the results would not be binding.
This is a stunning turn of events for the land of secret bank accounts and carefully calibrated neutrality. Even though most Swiss enjoy a very high standard of living, Mr. Minder’s campaign has struck a chord in a proudly egalitarian country increasingly unhappy with a growing class of super-rich unafraid to flaunt their wealth. Combine that with an undercurrent of xenophobia – many of the top-paid executives in Switzerland are foreigners – and you have a volatile mix.
In another sign of discontent, parts of the country are also considering scrapping the tax breaks that have lured wealthy foreigners such as Formula One driver Michael Schumacher, pop stars Phil Collins and Tina Turner, and Switzerland’s richest man, Ingvar Kamprad, the Swedish founder of IKEA.
“There is severe inequality that one really senses, even if there is no abject poverty in Switzerland,” says economist Hans Kissling, former head of the Zurich statistics office, who has written a book warning that the growing influence of the superrich carries the risk of turning Switzerland into a feudal state by undermining a tradition of direct democracy that dates back to the Middle Ages.
Statistics say the Swiss are the richest people in the world, with net financial assets of nearly $148,000 per capita. That is a third more than the average for the next two wealthiest nations-Japan and the United States. And when it comes to distribution of income, Switzerland is one of the most equal societies.
But the ownership of that wealth, including stocks or physical assets such as land and housing, is much more unequally shared in the nation, as is the trend elsewhere. The top 1 per cent in Switzerland control more than a third of the nation’s wealth, which is slightly larger than the share owned by the richest 1 per cent in the United States. Switzerland also has the highest density of millionaires in the West, with 9.5 per cent of all households having $1-million or more, and the greatest number of ultra-rich families – 366 households worth more than $100-million. Ten per cent of all the world’s billionaires live there.