In 2018 the US Economic Policy Institute calculated compensation of the average CEO in the largest 350 US companies was 14,4 million dollars, 271 times the 58,000 dollars annual average pay of the American worker,.
The Economic Policy Institute is a left-wing think tank. Their motives to research and publish the data may be “politically motivated”, but the data is what it is.
To remove the “political”, “leftie”, etc., “aroma”, let us fly over to Switzerland; a country with very solid democratic institutions and more friendly to entrepreneurs and business than even the US.
Switzerland also is a country with amazing executive talent. This is demonstrated by the hard fact that Switzerland exports, in relation to its population, twice as much in high technology goods and services than high tech export powerhouse Germany, and EIGHT TIMES more than the US. To do that you must have pretty good executives, executives also pretty good at developing very good employees at all levels.
In 2013 the Swiss acted when executive pay became “only” 40 times the pay of the average worker. They took matters into their own hands; the way direct democracy allows them to.
The Swiss got spooked because some very highly paid executives, like those at one of Switzerland’s more prestigious and “stable” banks, UBS, screw up big when they got sucked into US quick money financial schemes engineered by other “super bright”, even more highly paid, executives, who wrecked the major US financial institutions.
Thomas Minder launched the initiative. He is a Swiss entrepreneur and independent politician who sits with the Swiss People’s Party (a sort of Swiss-style “populist” party). The Socialist party also supported the initiative.
Herr Minder started the petition to have the issue decided by all voters in a referendum. The organizers gathered the required 100 000 signatures, about 1% of the population, and a referendum to amend the Swiss Constitution took place.
It is interesting that supporters of the initiative spent only about 200,000 dollars. Those against it spent 8 million. It seems that in direct democracy big money can live happily, but does not call the political shots.
70 per cent of voters said yes to the initiative. The initiative changes the Swiss Constitution; another example of real government by the people.
The initiative was also designed to control the “golden handshakes” and “golden parachutes”, not just excessive pay at work.
Later on there was another initiative who really scared executives, perhaps it scared Herr Minder too; its goal was to cap executive pay a 12 times the salary of the lowest paid worker in the company.
The latter initiative did not pass, but it was a warning to what can happen when ordinary citizens, of all political tendencies, get mad at the abuses of the foolish elites and have the power of direct democracy. They do not need to demonstrate, set cars on fire, riot or fall into the hands of flame-spewing “revolutionary” demagogues. In direct democracy ordinary people get organized, vote and settle the issue.
While the Swiss people acted, people in other countries; the US, France, UK, Canada, etc., all they can do is watch the news about excessive pay, listen to politicians of the left raise hell over “inequalities”, and to those on the right mumble something, but more muted, and…, nothing changes.
The result is that the pressure for change may continue to build to dangerous levels, until society “explodes”. The explosion may elect a government that caps executive pay, nationalizes companies for “social mismanagement”, promises “money and happiness for all”, etc.
Is it not time to bring direct democracy to your country?
THE TEXT OF THE SWISS INITIATIVE:
The initiative is now the law of the land. Notice how the initiative does not come down with radical measures; basically it limits itself to make sure shareholders control executive pay.
The Federal Constitution of Switzerland of April 1999 is amended as follows:
Art. 95 paragraph 3 (new)
(3) In order to protect the economy, private property and shareholders and to ensure sustainable management of businesses, the law requires that Swiss public companies listed on stock exchanges in Switzerland or abroad observe the following principles:
(a) Each year, the Annual General Meeting votes the total remuneration (both monetary and in kind) of the Board, the Executive Board and the Advisory Board. Each year, the AGM elects the President of the Board or the Chairman of the Board and, one by one, the members of the board, the members of the Compensation Committee and the independent proxy voter or the independent representative. Pension funds vote in the interests of their policyholders and disclose how they voted. Shareholders may vote electronically at a distance; proxy voting by a member of the company or by a depositary is prohibited.
(b) Board members receive no compensation on departure, or any other compensation, or any compensation in advance, any premium for acquisitions or sales of companies and cannot act as consultants or work for another company in the group. The management of the company cannot not be delegated to a legal entity.
(c) The company statutes stipulate the amount of annuities, loans and credits to board members, bonus and participation plans and the number of external mandates, as well as the duration of the employment contract of members of the management.
(d) Violation of the provisions set out in letters a to c above shall be sanctioned by imprisonment for up to three years and a fine of up to six years’ remuneration.
The transitional provisions of the Federal Constitution shall be amended as follows:
Art. 197 section 8 (new)
- Transitional provisions for article 95 paragraph 3
Pending implementation of the law, the Federal Council shall implement legal provisions within one year following the acceptance of article 95.