[Ip-health] Big Pay Deals Irk a CEO: One Swiss Executive,Wants National Vote,To Force Tighter Rules

[Joana Ramos]

http://online.wsj.com/article/SB117996657294612803.html?mod=3Dgooglenews_ws=
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Big Pay Deals Irk a CEO
One Swiss Executive
Wants National Vote
To Force Tighter Rules
By EDWARD TAYLOR

May 24, 2007
WSJ (copied as fair use)

In Switzerland, long a safe haven for big money, a backlash is
developing against outsized executive compensation.

The push is being spurred on by an unlikely source: a CEO. Thomas
Minder, a 47-year-old chief executive of small cosmetics manufacturer
Trybol AG, is going to shareholder meetings at Swiss giants like
Novartis SA to challenge their CEO pay packages.

Mr. Minder has been collecting signatures to call a national vote -- as
permitted under the Swiss constitution -- to amend Swiss law to force
more transparency and accountability on executive compensation. He says
his goal is to create ways for shareholders to veto pay packages and
create more "sensible" pay practices in Switzerland, a country where
wealth has traditionally been welcomed, rather than frowned upon.

Across Europe, growing disenchantment with high executive pay is
increasingly a political issue. In France, the losing candidate for the
presidency, S=E9gol=E8ne Royal, called on Airbus to withdraw its proposed
10,000 job cuts after it disclosed that No=EBl Forgeard, former chief
executive of Airbus and its parent, European Aeronautic Defence & Space
Co., received =806.1 million ($8.2 million) in an exit pay package. The
company said the package was provided for in his contract, but Ms. Royal
called the payment a "scandal."

In Germany, Finance Minister Peer Steinbr=FCck has said Europe's social
model couldn't be sustained if the wages of low earners fall as company
profits rise.

Switzerland is set to introduce greater disclosure of executive
compensation for companies listed on the Swiss exchange. Starting next
year, companies must disclose the salaries of the highest-paid member of
the management board. Previously, Swiss companies released only the
total salaries of the combined management board and the individual
salary of the highest paid member of the supervisory board, which is
akin to a U.S. board of directors. And the Swiss government is
considering further amendments to laws governing public companies, aimed
at improving corporate-governance practices.

Some of the companies that will be affected by any new rules include
engineering and industrial concern ABB Ltd., food maker Nestl=E9 SA, drug
giant Novartis and banks UBS AG and Credit Suisse Group.

Current law allows Swiss companies to disclose less detail on executive
pay than U.S. companies. They aren't required to disclose individual pay
packages for chief executives and often don't have to mention benefits
such as personal loans or housing allowances.

The government's efforts on further pay disclosure don't go far enough
for Mr. Minder, however. He wants to introduce a law that allows
shareholders to block pay packages, among other measures.

Mr. Minder says he pays himself "far less" than 100,000 Swiss francs, or
about $81,300, a year and took on his campaign because pay levels are so
high that "executives don't suffer personal financial hardship even if
their performance at the helm of the company is miserable."

"We need to bring this relationship between pay and performance back
into line," Mr. Minder says.

Among his 25 proposals: giving shareholders the right to block or
approve pay packages; a complete ban on "golden parachutes," or pay
packages given to executives upon leaving a company; and measures that
would force institutional shareholders to disclose how they voted on
issues such as approving bonuses.

In setting pay, companies also should consider factors such as customer
satisfaction and staff morale, he says.

Mr. Minder says he follows his own recommendations in setting his
compensation. He owns the company, and he sets his pay, considering
factors including the company's revenue and the views of customers and
its 30 employees.

Many large multinationals based in Switzerland already voluntarily
disclose more information than required by law about executive
compensation, in line with their international rivals. The more-detailed
disclosures at Nestl=E9 and Novartis, for example, often draw public
criticism at home.

At Novartis's annual shareholders' meeting in early March, Mr. Minder
questioned the size of Chief Executive Daniel Vasella's pay package. Mr.
Minder pointed out that the Novartis CEO's pay rose to about 44 million
francs last year from about two million francs in 1996.

While Mr. Vasella's pay package wasn't put to a shareholder vote, the
company said his golden parachute -- the equivalent of five years'
salary -- won't be renewed when the CEO's contract expires in 2009.

Novartis spokesman John Gilardi said the decision to end the award of
the golden parachute was a mutual decision made between Mr. Vasella and
the remuneration committee and is "completely unrelated to anything Mr.
Minder has done."

Mr. Gilardi said the value of Mr. Vasella's package last year
represented the cumulative value of share grants over a number of years.
More than 90% of Mr. Vasella's compensation is linked to
performance-related variables such as stock price, the spokesman added.
Novartis declined to comment on Mr. Vasella's salary in 1996, saying the
company hadn't then adopted the policy of disclosing the chairman's salary.

Novartis said it needs to pay salaries that are competitive globally to
attract the best scientists. The average Novartis employee's salary rise
has outpaced the Swiss average, he said.

Spokespeople for UBS, Credit Suisse and Nestl=E9 declined to comment on
Mr. Minder's cause. They said their compensation practices reflected
international standards and were necessary to attract global talent to
their companies.

If Mr. Minder collects 100,000 signatures, his proposals will be put to
the Swiss Parliament and federal councilors. They can come up with a
counterproposal or allow a popular vote on Mr. Minder's proposals,
thanks to the Swiss tradition of direct democracy. Mr. Minder has until
May 2008 to hand in the signatures, and he says he is "very well on
track," without being specific. A national vote may not follow for at
least a year.

While the chances of success for a popular vote, known as a plebiscite,
are very slim, the move to force a vote makes the issue part of the
mainstream political agenda, said Wolf Linder, a professor of politics
at the University of Berne. "Many political ideas have been brought to a
vote by means of popular initiatives and often against the firm
conviction of almost all political elites," he said.

Write to Edward Taylor at edward.taylor@wsj.com

--
Joana Ramos, MSW
Cancer Resources & Advocacy
Seattle WA USA
Tel. +1-206-229-2420
http://ramoslink.info/
www.cancersurvivorsproject.org
www.healthyskepticism.org