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Switzerland to Limit CEOs Pay. Should the U.S. Follow?

Switzerland to Limit CEOs Pay. Should the U.S. Follow?

This past week, the European Union took a firm stand against chief bankers who are rewarded with multi-million dollar bonuses even as their businesses flounder. In a near-unanimous vote, members of the EU decided that executives’ bonuses could not legally exceed their annual salary, although shareholders are given the discretion to double that amount for a job well done.

The United Kingdom, the country most entangled with the financial industry, was the sole voice of dissent in this decision. Though Reuters estimates that the legislation will only affect 5,000 British bankers, in a sign that these are indeed some very influential people to the British government, the UK has indicated that it will continue to fight the ruling set to go into effect next year.

Meanwhile, Switzerland went a step further. In the country’s own election, over two-thirds of its voters agreed that enormous CEO pay offs needed to be limited. Swiss shareholders will now have the ability to overturn an undue compensation package. The vote made this stipulation not only a law, but part of Switzerland’s constitution.

Expectedly, some economic critics have denounced these decisions, saying it will drive these businesses to other countries. Others, like the author of this Guardian Op-Ed, believe it is silly to think banks won’t invent more loopholes as they always have. “Banks will now study the text of the final legislation and draw up their responses under the radar,” writes Nils Pratley. “Just don’t expect them to tell their high earners to take it on the chin.”

Nonetheless, the public support of the CEO-targeted legislation is strong. Europeans have grown exasperated at seeing company execs who accepted government bailouts for their companies soon after awarding themselves tens of millions for a job well done.

These problems are not unique to Europe – the United States has similar bonus-happy CEOs. In particular, the issue of wealth disparity is gaining renewed attention with a viral video that plainly, yet smartly breaks down the country’s monetary ownership.

Check it out:

The video relies on three charts: how people think wealth should be distributed, how people think wealth is distributed, and then finally how wealth is actually distributed. The massive differences are enough to convince some people who once considered protesting the 1% to be whining about class warfare to give the issue a second look.

Is a law to cap CEO bonuses and salaries a solution in the United States? Considering that no top bankers have gone to jail and corporate lobbyists practically control the government, I have trouble seeing legislation like that passing here anytime soon. However, it is a conversation worth having as more people recognize the absurd extent of monetary hoarding by a handful of people.

 

Related Stories:

Bankers Make More Money Than Everyone, Complain About It

Banker Bonuses Fall Thanks to Government Regulation

Are Fed Bankers Colluding to Enrich Themselves?

 

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141 comments

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10:05PM PDT on Mar 18, 2013

force them to eat pork

1:50PM PDT on Mar 12, 2013

yes

1:00PM PDT on Mar 12, 2013

Short answer: HELL YES. We've gotten so crazy in the US with exec pay, that the workers are suffering. We can't even get the minimum wage to a measy $9 a hour without somebody screaming about hurting the company, or damaging the economy. But it's perfectly fine if a CEO makes +300X what his workers make. It's insane.

11:01PM PDT on Mar 11, 2013

interesting article, thanks

4:25PM PDT on Mar 11, 2013

This article should have had a voting button. Mine would be a resounding YES!

10:22AM PDT on Mar 11, 2013

To answer the question, yes.

6:46PM PDT on Mar 10, 2013

Marianne C You are totally correct and that's what Australia did. The Government didn't give the banks any money. What they did do was guarantee the savings of the man in the street up to 500K - they did this so there wouldn't be a run on the banks which kept our financial markets stable. In the end it cost them very little money because the banks didn't go broke and there were very few repossessions as well.

9:04AM PDT on Mar 10, 2013

This is what's wrong with everything. Just because you own a business shouldn't mean you use your hired employees as slave labor. Without them you would never have made your fortune by yourself. You should never work for someone but with them to make their business a success and in turn be adequately compensated. This -% is monopolizing the profits and its just dead wrong.

7:35AM PDT on Mar 10, 2013

WE should have bailed out the homeowners and jailed the crooked bankers. The bailout money was substantially used to pay obscene bonuses. Now, the rest of the world is using the way we did it as a bad example.

4:44AM PDT on Mar 10, 2013

Put down wages, make them responsible for errors financially. (money always talks). The same should go for politicians and governments also. THERE MUST BE A SYSTEM WHERE THEY HAVE TO PAY FOR THEIR ACTIONS, SOMETHING THAT HIT HARD! Today the worst case is that they loose their job, but still have salary for the rest of their life??????

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