anti rip-off vote coming up in Switzerland

[Keunert]

You may have heard that the former Novartis CEO Vasella made a deal to not join any competing chemistry company within the next 6 years. they will pay him 70mio for this.
but he got that much pressure that he stepped back from the deal. the pressure comes from an upcoming vote in march: there is an anti rip-off vote initiated by a right wing
medium sized company ceo called Minder. He felt that the top salaries of UBS, Novartis and the like were rip offs and that he as a shareholder should have a vote in
the amount of money going into salaries.

the vote will most like succeed and will forbid any golden goodbye gifts, it will force the top salaries to be accepted by the shareholders. it also forces institutional investors to execute their
right to vote.

this thing has some interesting aspects: it was initiated by a CEO, not by social democrats, it is initiated in the least social democratic country in europe and there is an extraordinary
level of agreement on the issue.

[LongBlade]

Weird. Why would they try to cap salaries? It's no different than paying top dollar for a soccer player.

[Keunert]

it is considered unethical. why should Vasella get 1mio dollars a month to sit around for full six years? how about him being greatful to his former employer and guarantee them not to cause any hurt? after all he earned well above 20mio a year.
i do think it's unethical. But Minder also thinks that those wages are hurting those firms, that the top elite manages to regulate it's own wages and just starts to basically steal money. Minder runs a family business and thinks that such wages cannot be justified.
one of our business magazines did a review on Vasella's time at Novartis. the conclusion was that he did not hurt nor improve Novartis situation. this achievement costs them a quarter of a billion dollar.

but you are right, i do think that top sport players have absurd wages too.

[besilarius]

Have heard this kind of golden parachute as a guarantee that the "retired" official will not be tempted to join a competing firm, or to share business secrets and strategies to the opposition.
If it came out that he had, the original firm could sue him.
Not sure if this effort is realistic or not, but since ethics does not exist anymore, the justification seems to be necessary to many firms.

[Barthheart]

Have heard this kind of golden parachute as a guarantee that the "retired" official will not be tempted to join a competing firm, or to share business secrets and strategies to the opposition.
If it came out that he had, the original firm could sue him.
Not sure if this effort is realistic or not, but since ethics does not exist anymore, the justification seems to be necessary to many firms.

That kind of thing is usually covered by NDA's (non-disclosure agreements). Having been involved in a few business NDA's I can tell you that they are only enforceable for 2 years after you end work for the company. After that anything you know/learned is considered "skills" and can be freely used/shared. It can get messy and heated if all parties do not fully understand whats being agreed to...

As for the OP, I think it's odd that it needs to go to a public vote. What a company does and how it compensates it's employees should be dictated by the company not government. Saying that, however, compaines should not be able to raid pensions if business goes south nor should they be able to hand out any kind of bonuses if they have been bailed out of failure and have not repaid their "loans".

Oh and Pro atheletes are paid way too much for what they provide.  :P

[Keunert]

^ the public are the shareholders, not the general public.

and what do you think to have shareholders to vote on the top league's wages? i think that is pretty fair and non socialist.
if you put your money into a company that loses a lot of money like Credit Suisse did two years ago, thus destroying some
of your investment, i guess it is fair to have a say regarding compensations of those in charge.

my hope would be that the necessity to present you wage plans to the shareholders will restore some sanity within the ceo's.

[Barthheart]

and what do you think to have shareholders to vote on the top league's wages? i think that is pretty fair and non socialist.
if you put your money into a company that loses a lot of money like Credit Suisse did two years ago, thus destroying some
of your investment, i guess it is fair to have a say regarding compensations of those in charge.

my hope would be that the necessity to present you wage plans to the shareholders will restore some sanity within the ceo's.

If I'm a shareholder of a company that loses me lots of money then I'd vote out whom ever is running it. That's the power of the shareholders.
I agree you should only get good bonuses if you do well, not just for sitting in the chair, but to attract good people to the job you need to be willing to pay more than other companies.

[Longdan]

and what do you think to have shareholders to vote on the top league's wages? i think that is pretty fair and non socialist.
if you put your money into a company that loses a lot of money like Credit Suisse did two years ago, thus destroying some
of your investment, i guess it is fair to have a say regarding compensations of those in charge.

my hope would be that the necessity to present you wage plans to the shareholders will restore some sanity within the ceo's.

If I'm a shareholder of a company that loses me lots of money then I'd vote out whom ever is running it. That's the power of the shareholders.
I agree you should only get good bonuses if you do well, not just for sitting in the chair, but to attract good people to the job you need to be willing to pay more than other companies.

That last statement was invented by guys who think they should get more money.  You hear it frequently from politicians.
The last place I worked full time was a very large "not for profit corporation".  The CEO was also board chairman.  He assigned himself "goals"
and then awarded himself bonuses based on their achievement.  Whether he reached his goals or not was determined by him.
His bonuses were larger than his salary.  Nice job if you can get it.

[LongBlade]

and what do you think to have shareholders to vote on the top league's wages? i think that is pretty fair and non socialist.
if you put your money into a company that loses a lot of money like Credit Suisse did two years ago, thus destroying some
of your investment, i guess it is fair to have a say regarding compensations of those in charge.

my hope would be that the necessity to present you wage plans to the shareholders will restore some sanity within the ceo's.

If I'm a shareholder of a company that loses me lots of money then I'd vote out whom ever is running it. That's the power of the shareholders.
I agree you should only get good bonuses if you do well, not just for sitting in the chair, but to attract good people to the job you need to be willing to pay more than other companies.

This.

Shareholders tend to punish companies that fail to generate wealth. Paying out an executive who, for whatever reason, has left the company is standard practice.

The issue isn't what his golden parachute looks like, it's what the next guy can bring to the table to make things better. If the next guy needs to be paid a metric crap-ton of money to ensure top talent makes top dollar for the shareholders then no one will care. If he fails, his compensation will suffer accordingly.

[LongBlade]

That last statement was invented by guys who think they should get more money.  You hear it frequently from politicians.
The last place I worked full time was a very large "not for profit corporation".  The CEO was also board chairman.  He assigned himself "goals"
and then awarded himself bonuses based on their achievement.  Whether he reached his goals or not was determined by him.
His bonuses were larger than his salary.  Nice job if you can get it.

Yup. Both politicians and non-profits suffer from the same problem: a lack of accountability and competition. Not a surprise that both generally fail to achieve much efficiency.

[Keunert]

that this is standard practice makes it no less wrong.

Ospel, the guy that ruined the swiss financial place and was in charge when UBS did all those illegal business models, earned 60'000 bucks a day. he will never get sued by the bank, they promised it. and they fear that this would trigger even more law cases. generously he declined a golden parachute. he just took the 2.3 mio they gave him for his early retirement. (i guess 2.3 mio is not enough to be called a golden parachute)

Obviously there no business ethics there at all. some of the big investors, like pension funds, were against those practices for years now. the Minder vote will hopefully help to give them some more weight.

[Boggit]

The problem is partly due to the fact that the very people who sit on one pay review committee are very often executive officers in another firm. There is a vested interest in seeing pay inflation occur. Ironically, you always hear the mantra that if you don't pay excessive sums, you won't attract the right people. I can think of a lot of people who would work hard, bring the right skills etc to a firm without earning the equivalent of a lottery win every year. This is a relatively new phenonmenon over the last thirty years or so, but politicians and executives (particularly in large firms) buy into the idea very quickly because of self-interest. To suggest that shareholders have much control over the wage hikes is naive, when you consider that shareholdings tend to be fragmented amongst the public, or more commonly by large investment organisations like pension companies whose own executives benefit from the same inflated pay culture. It is not in their own interest to oppose it.

[Longdan]

When my long term job was part of the civil service our ultimate boss was ADMA: Assistant Deputy Minister Aviation.
He was a top level civil servant paid aproximately double the compensation the highest level operational employee was paid.
(Operational being people who did the actual work rather than bean counters.)  When we moved to a "not for profit" corporation
our new CEO was hired from "outside" (like who the hell would know how to do this except us?) and he was offered "compensation"
about 4 times the highest operational employee...in order to get the "best" guy.  A few years down the road operational benefits
have increased by 2-3% per annum through drastic cost cutting.  The CEO (same guy) now receives in pay and benefits about 8-10 times
the highest paid operational employee.  His mandate was to keep the Unions from grabbing all the cash.  He won.  He grabbed it instead
but at least those goddam commie unionists didn't get it.

[Boggit]

When my long term job was part of the civil service our ultimate boss was ADMA: Assistant Deputy Minister Aviation.
He was a top level civil servant paid aproximately double the compensation the highest level operational employee was paid.
(Operational being people who did the actual work rather than bean counters.)  When we moved to a "not for profit" corporation
our new CEO was hired from "outside" (like who the hell would know how to do this except us?) and he was offered "compensation"
about 4 times the highest operational employee...in order to get the "best" guy.  A few years down the road operational benefits
have increased by 2-3% per annum through drastic cost cutting.  The CEO (same guy) now receives in pay and benefits about 8-10 times
the highest paid operational employee.  His mandate was to keep the Unions from grabbing all the cash.  He won.  He grabbed it instead
but at least those goddam commie unionists didn't get it.

I'll bet the same results (the good ones that is) could have been achieved without paying such a premium for the CEO? Over the years I've come to the conclusion that ability and earnings are not necessarily linked and this is often more the case the higher up the organisational chain you go, particularly as accountability becomes harder to pin at board/senior level. Also the bigger the organisation, you often see a reluctance to rock the boat entrenching executives regardless of competence, for internal political reasons, or because shareholders are ineffective in protecting their interest from the interest of senior management whom they rely upon.

[Longdan]

We were doing just fine with a salaried employee as our leader.
We didn't need an "expert" to get paid 5 times as much to do the same job.
Over that time period his rate of compensation more than doubled, management compensation became secret
and unionised employees increased by about 10-12 percent, all the while the company blamed 911
for being in desperate financial straits.  What a bunch of bullshit.  We also lost the right to strike.
His credentials?  Running a small regional airline into the ground.  I heard he gives good head.