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Voters Tighten Limits on Executive Pay in Switzerland

The vote gives shareholders of companies listed in Switzerland a binding say on the overall pay packages for executives and directors. Pension funds holding shares in a company would be obligated to take part in votes on compensation packages.

In addition, companies would no longer be allowed to give bonuses to executives joining or leaving the business, or to executives when their company was taken over. Violations could result in fines equal to up to six years of salary and a prison sentence of up to three years.

The outcome of the referendum was a triumph for Thomas Minder, an entrepreneur and member of the Swiss Parliament (no relation to the reporter), who turned a personal fight against the management of Swissair, the flagship airline that collapsed in 2001, into a nationwide referendum against “rip-off merchants.”

Almost 68 percent of Swiss voters backed Mr. Minder’s proposals, according to results announced late Sunday.

“I am very proud of the Swiss people who have sent a very strong signal to the establishment,” Mr. Minder told Swiss television. Despite the fact that his referendum had been opposed by Switzerland’s main political parties, Mr. Minder, who is an independent member of the Swiss Parliament, called on all lawmakers to cooperate in swiftly enacting the law.

Nonbinding shareholder votes on executive pay have also been introduced in countries like the United States and Germany in response to Occupy Wall Street and other movements that have attacked the corporate excesses and abuses that fueled the world financial crisis. On Thursday, the European Parliament agreed to limit bonuses of bankers to two times their salaries.

In the case of Switzerland, however, Mr. Minder called for a much broader and tougher clampdown, striking a chord among citizens after the world financial crisis exposed major management failures at the financial giant UBS and other Swiss institutions.

Mr. Minder’s case was unexpectedly bolstered last month when Novartis, the pharmaceutical company, agreed to a $78 million severance payout for its departing chairman, Daniel Vasella. That set off a political storm and intense criticism from some investors, forcing Novartis to scrap the payout and prompting Mr. Vasella to tell shareholders that it had been a mistake.

Cristina Gaggini, an official from EconomieSuisse, the Swiss business federation, said Sunday that the business lobby had made some “major errors” in its efforts to stop Mr. Minder’s decade-long crusade, adding that the Novartis payout plan had amounted to a turning point in the referendum campaign.

After that, Ms. Gaggini said on Swiss national television, “It became impossible to return to a reasonable debate.”

Ahead of the vote, EconomieSuisse and Mr. Minder’s other opponents warned of dire consequences if the referendum passed, notably in terms of keeping Switzerland attractive to foreign companies and investors.

But Mr. Minder argued that Switzerland would benefit if it gave shareholders control over the companies in which they invested. Well over half the shares in many of the country’s largest companies are already held outside the country. “Investors put their money where they have the most to say, and that will clearly then be Switzerland,” Mr. Minder said ahead of the referendum.

Robin Ferracone, chief executive of Farient Advisors, an American advisory firm that specializes in executive compensation issues, said that even though the referendum would add “more burden to corporate processes, I do not predict an exodus from Switzerland,” because the tax and other benefits of being based in the country would still outweigh “the inconvenience” of having to adjust to stricter executive compensation rules.

Mr. Minder started his campaign after his family-owned business came close to bankruptcy because it had been a supplier of toothpaste and other body care products to Swissair, the airline that was grounded in October 2001.

While Swissair had run out of money, it still managed to pay an advance earlier that year of 12 million Swiss francs (about $9.6 million at the time) to a chief executive, Mario Corti, who then left shortly after the airline’s collapse.

Mr. Minder then broadened his campaign, accusing several bankers and other prominent executives of receiving “rip-off” pay packages. His campaign gained such momentum in recent months that relatively few such executives confronted him publicly, in this neutral and compromise-seeking country.

Article source: http://www.nytimes.com/2013/03/04/business/global/swiss-voters-tighten-countrys-limits-on-executive-pay.html?partner=rss&emc=rss

Special Report: Energy: China Marches On With Nuclear Energy, in Spite of Fukushima

Meltdowns of three reactors at the Fukushima Daiichi nuclear power plant in Japan last March have put a chill on much of the world’s nuclear power industry — but not in China.

The German Parliament voted this summer to close the country’s remaining nuclear power plants by 2022, while the Swiss Parliament voted this summer to phase nuclear power out by 2034. Economic stagnation in the United States and most other industrialized economies since 2008 has produced stagnant electricity demand, further sapping interest in nuclear power.

In Japan itself, the government has put on hold its plans to build further nuclear power plants, and the government faces a political battle to continue operating existing reactors. Emerging economies like Brazil and particularly India are still planning nuclear reactors. But the Indian leaders introduced legislation on Sept. 7 that is supposed to increase the independence of nuclear regulators from the industry, though critics are skeptical.

That leaves China poised to build more nuclear reactors in the coming years than the rest of the world combined. But questions abound whether China will be a savior for the international nuclear power industry, or a ferocious competitor that could create even greater challenges for nuclear power companies in the West.

Chinese regulators performed a four-month review of safety at all existing nuclear reactors and reactors under construction after the Fukushima meltdowns and declared them safe. Safety reviews continue at reactors where construction had not yet started at the time of the Fukushima accident.

Jiang Kejun, a director of the Energy Research Institute at the National Development and Reform Commission, the top Chinese economic planning agency, said that the government was sticking to its target of 50 gigawatts of nuclear power by 2015, compared to just 10.8 gigawatts at the end of last year.

Mr. Jiang said in an interview that nuclear power construction targets for 2020 had not yet been set and might end up slightly lower than they would have been without the meltdowns in Fukushima. But he and other Chinese officials say that China’s rapidly rising electricity consumption makes nuclear power essential. They even try to portray the Fukushima incidents as salutary for the nuclear power industry, a view seldom heard elsewhere.

“Globally, I think Fukushima could be a good thing for nuclear power,” Mr. Jiang said. “We can learn a lot from that. We can’t be smug or too clever.”

China allowed existing reactors to continue operating during the safety review from March to July and allowed construction to continue at reactors where it had already begun. Chinese regulators have also encouraged electric utilities to continue planning future nuclear power plants.

But one category of reactor has been delayed by the Fukushima incident. At reactors that had been approved before the Fukushima accident but where construction had not yet begun, the government still has not allowed construction to start while continuing to study whether further safety improvements can be made, said Xu Yuanhui, one of China’s top nuclear engineers for the past half century.

The delay applies to several conventional nuclear reactors plus Beijing’s project to build two reactors in northeastern China, using a new generation of technology known as a pebble-bed design. Critics and advocates describe it as safer than current reactors, though its cost-effectiveness unclear.

The two reactors in Shidao, in Shandong Province in northeast China, were approved days before the Fukushima nuclear accident began with an earthquake and tsunami March 11. But the 50-month timetable for building them cannot start until the government lifts its hold on construction.

“By the end of this year, maybe we’ll have some information from the government side,” Dr. Xu said.

Nuclear power represented only 1.1 percent of China’s electricity generation capacity at the end of last year. With wind turbines and coal-fired power plants being installed at rates that far surpass those in any other country, nuclear power is on track to account for no more than 4 percent of electricity capacity by 2015.

Article source: http://www.nytimes.com/2011/10/11/business/energy-environment/china-marches-on-with-nuclear-energy-in-spite-of-fukushima.html?partner=rss&emc=rss

Voters Tighten Limits on Executive Pay in Switzerland

Special Report: Energy: China Marches On With Nuclear Energy, in Spite of Fukushima

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