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Switzerland

Corporate Revolution: Switzerland Kisses Goodbye To The Golden Parachute

The good kind of "golden parachute" in the Swiss Alps
The good kind of "golden parachute" in the Swiss Alps
Laurence Boisseau

BERN – Switzerland may be set to become the world champion of shareholder democracy.

Swiss voters gave overwhelming approval to the popular initiative against excessive corporate compensation -- an initiative launched by Thomas Minder, an entrepreneur from the city of Schaffhausen. Some 68% voted in favor of Sunday's ballot measure, and each local canton received at least a simple majority of support for the new law.

Polls had shown that the text of the proposition had already convinced most Swiss voters even before the so-called “Vasella effect.” Three weeks from the vote, the country learned that president of pharmaceutical group Novartis, Daniel Vasella, was about to be granted a 72 million Swiss francs ($75.3 million) parting bonus. His refusal to cash in on the massive "golden parachute" wasn’t enough to appease popular anger.

Long trailing behind neighboring countries in terms of corporate oversight, Switzerland is now poised for a true revolution, ready to become a veritable model in shareholder democracy. Every year, the shareholders will - inconveniently for them - have to approve the salary of both the top tier of management and the executive board. Board members will also need to be reelected annually (as opposed to the previous three-year mandates), and on an individual basis.

Risk of jail time

Both parting “golden parachutes” and signing bonuses will be prohibited. In case of violation of the General Assembly’s decisions, the executives will face criminal charges that can be punishable by three years of jail time and a fine equivalent to six years of salary.

This text is binding, as it will be added to the Swiss constitution -- which is almost never prone to modifications.

“I’m glad that this struggle is over,” said Thomas Minder to the German-speaking Swiss TV channel SRF.

This Robin Hood of Switzerland's corporate world started his battle in 2002, after SwissAir’s 2001 downfall and the scandal of the 12.5 million Swiss francs ($13.2 million) signing bonus from Nestlé to its then incoming CEO Mario Corti.

Minder’s company, Trybol, specializing in cosmetics, was one of the airline’s subcontractors, and was denied payment at the time.

Now begins another battle as to how this popular initiative will be enacted and applied. Switzerland's Federal Council has one year to enact the specific conditions according to which this new constitutional amendment will be enforced. The regular legislative process seemed off the table, for the Parliament was too slow to agree on an indirect counter-proposal.

“We know how divided the Parliament is,” said Minder. “The Federal Chambers had bargained for years over the initiative and its counter-plan, before it was presented to the citizens.”

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Economy

Lex Tusk? How Poland’s Controversial "Russian Influence" Law Will Subvert Democracy

The new “lex Tusk” includes language about companies and their management. But is this likely to be a fair investigation into breaking sanctions on Russia, or a political witch-hunt in the business sphere?

Photo of President of the Republic of Poland Andrzej Duda

Polish President Andrzej Duda

Piotr Miaczynski, Leszek Kostrzewski

-Analysis-

WARSAW — Poland’s new Commission for investigating Russian influence, which President Andrzej Duda signed into law on Monday, will be able to summon representatives of any company for inquiry. It has sparked a major controversy in Polish politics, as political opponents of the government warn that the Commission has been given near absolute power to investigate and punish any citizen, business or organization.

And opposition politicians are expected to be high on the list of would-be suspects, starting with Donald Tusk, who is challenging the ruling PiS government to return to the presidency next fall. For that reason, it has been sardonically dubbed: Lex Tusk.

University of Warsaw law professor Michal Romanowski notes that the interests of any firm can be considered favorable to Russia. “These are instruments which the likes of Putin and Orban would not be ashamed of," Romanowski said.

The law on the Commission for examining Russian influences has "atomic" prerogatives sewn into it. Nine members of the Commission with the rank of secretary of state will be able to summon virtually anyone, with the powers of severe punishment.

Under the new law, these Commissioners will become arbiters of nearly absolute power, and will be able to use the resources of nearly any organ of the state, including the secret services, in order to demand access to every available document. They will be able to prosecute people for acts which were not prohibited at the time they were committed.

Their prerogatives are broader than that of the President or the Prime Minister, wider than those of any court. And there is virtually no oversight over their actions.

Nobody can feel safe. This includes companies, their management, lawyers, journalists, and trade unionists.

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