The Swiss referendum on executive pay

... passed. Overwhelmingly. All 26 cantons passed, with an average of 68% of the vote.

http://www.spiegel.de/international...iss-referendum-on-executive-pay-a-886741.html

I know, the horror, right? In an age where instantaneous communication is possible, CEOs will now have to actually face their shareholders, not just their hand picked board members, when divvying up the loot.

Sound familiar?

The first domino has fallen.

Ah, yet another Christian for Greed. Amazing how many of that ilk there are.

Anyone who advocates for shareholder control is clearly a Red.

Shareholders want control? What are they but communists in disguise!

It's a symptom of the European socialist entitlement culture. The shareholders believe that just b/c they own the company, they should have final say on how its run. That commie bullshit will never fly here.

I'm very torn on this. On the one hand, salary is between the company and the manager. If they thinks s/he's worth it, go right ahead and pay whatever you think is appropriate. On the other hand, those huge bonus payments invite risk taking on levels that are not healthy. In the case of banks or 'too big to fail' companies it's the taxpayer who pays the piper for that.

There needs to be a middle ground. Shareholder control sounds just about right, and I don't mean only the majority holders but every last grandma who has one share tucked under her mattress. If there is only one cent of taxpayer money in a company (I'm thinking all the 'rescued' banks), there need to be hard rules. Those guys are our employees now.

That's anti-America, anti-capitalist, to advocate that the owners have a say in the use of their property.

You say that as if there is an inherent contradiction. There is not.

A Christian can very easily advocate for freedom for something of which he himself does not approve. Your implication that one should only favor the freedom of what one approves of personally is, in fact, fairly narrow-minded, as is the accompanying implication that you can pass judgment on a person's moral values simply because he is in favor of allowing something. Are there no issues on which you can say: "I personally find this attitude to be a bad thing, but do not think it is the place of the law to attempt to impose that value on everyone"?

This pretty much describes my own position on the issue. Personally, I find many salaries and bonuses to be downright ridiculous, but I am enough of a libertarian to believe that people can do what they want with their own money as long as they aren't hurting someone else with it. But for the stockholders to make the decision (or at least to have veto power over decisions) seems perfectly normal: It is, after all, their money that these guys are using, risking, and making their personal fortunes on.

The only problem with this whole initiative is that, generally speaking, the vast majority of shareholders are institutional investors. And they're in the same boat as the rest of the market (i.e., take as much money as you can and fuck everyone else.)

I blame damn Durwinism & Evilution fur it!

Wow, I"m having a really hard time in this thread, figuring out who is being sarcastic and who is not!

Umm...perhaps...Capitalists!

Christians for sin? Yes, there is an inherent contradiction.

Depends on what that thing is, doesn't it? Christian against legislation to criminalize murder would seem to be a non-starter.

I haven't seen evidence that is actually Caboose's position - he simply showed disapproval that there is a push for anti-greed legislation, he stated no position on why he disapproved of that.

And of course positive assertions that legislation against one of the seven deadly sins is a bad thing opens one up to that criticism.

I can see not actively seeking out such legislation in the avoidance of imposing your belief system on others - I have a much harder time understanding actively disapproving of that legislation when others pass it in their name, not yours.

After all, greed is a sin.

And last I heard, to people that actually read and understood the bible, that government isn't.

But again, I see people who claim to be Christian coming up with the oddest rationalizations over and over and over again to coincide with their belief that that wanting a lot of money isn't a bad thing.

One thing in the bible is clear - regardless of what anyone else says in the bible, to Jesus it was.

If this trend takes off, it could further put pressure on companies to stay private.

The Endangered Public Company

Just a few random points to keep in mind:
1) This only applies to listed companies. Your billionaire hedge fund manager (and the banker that follows him into the shadow banking system) won't be affected.
2) There aren't any actual limits on compensation. It just says that total compensation (to the board and executive management) has to be approved by shareholders.

Overall, I think there are some questions about what the role of the board vs shareholders is but it doesn't seem to be such a huge thing.

Actually, its the antithesis of that. The principle failing of public companies cited in that article is the lack of agent's responsibility to the principles. In other words, the people running the company (the executives) are often not working in the best interest of the shareholders.

This gives the shareholders more power over that aspect of the governance of the company.

Good article.

In reference to the thread topic though I believe there is a difference between public v private and listed v unlisted no?

The initiative only applies to the roughly 300 listed companies. There are a total of around 300,000 companies in Switzerland (99.9% of which won't be affected).

The principal-agent problem is a problem for shareholders (and society, you might say), not the managers. It's the managers who are going to decide to float the company in the first place. Why would they want to cede even more control under the new laws? Keeping the company private ensures that the principals and the agents are mostly the same people, thus avoiding the problem.

The reason you go public is for increased investment. If the owners don't need that, they aren't going to go public in the first place. If they do, they are the ones who are going to decide, and the managers put in place then may well be different people entirely.

It will certainly impact those companies that are already public, which is the primary point.

Not necessarily. Zuckerberg didn't want to float Facebook; regulations forced him into it. It's in the article I posted.

And the need for increased investment is obviously weighed against the negatives of going public, including regulatory red tape. Giving shareholders more control is one less incentive.

The clear implication of this is that, because I do not consider homosexuality "normal," then even though I should not seek to impose laws that guarantee equal rights for homosexuals, I should not actively disapprove of those that exist.

Sorry, that's not the way my Christianity works. To me, my beliefs dictate my behavior, not the behavior of others. If I'm not willing to actively fight for the rights of others to live according to values that don't line up with my own, by opposing legislation that seeks to impose moral and ethical values on everyone (even when those values happen to be the ones that I, personally, live by), then I don't have much of a right to expect others to respect my right to live according to values that aren't the same as theirs.

This problem only happens because executive compensation isn't balanced by executive responsibility on the back end. To wit:

Herman is the CEO of MegaCorp. Herman was brought on with a large signing bonus, has cushy stock options, gets enormous bonuses for adequate performance, and of course a golden parachute should the worst happen. Herman, being schooled in all the latest business practices, makes decision after decision that benefits the shareholders in the short term while setting MegaCorp up for failure over the long haul - stuff like not reinvesting in company infrastructure, laying off expensive employees with seniority before he has to pay them a pension, outsourcing jobs to third-world countries to lower labor costs, and so forth - and the quarterly balance sheet looks great right up until the company fails.
Herman of course is not to blame for the failure. He demonstrably made all the right decisions as shown by the quarterly balance sheets. It was "unavoidable market forces" that did in MegaCorp. So Herman sails off into the sunset with a huge termination package and a year or so later winds up running SuperMegaCorp, which over the next ten to fifteen years he similarly runs into the ground. Herman has a reputation as an excellent CEO, despite leaving a trail of failed companies behind him.

In a rational world, Herman would have been kicked to the curb after MegaCorp failed because he didn't look after the company's long-term interests, he simply made sure the shareholders saw ever-increasing dividends until the company was bled dry and collapsed. No golden parachute, no cushy severance, no year at the beach house on Maui while waiting to be headhunted by the next executive recruiter. Herman would be persona non grata in the corporate world because he killed his company.

In the real world, Herman garners huge rewards and a reputation as a good manager because our business model is focused on short-term profits to the near-total exclusion of all other considerations.

Reread your article. The regulations that forced him to were triggered by him having over 500 investors.

And why did he have over 500 investors?

Exactly. And this is why executive pay needs to be based on performance.

Indeed. That's why two things must happen, but they can't be legislated:

1. Outlook does NOT mean 'end of the quarter and not a day further'.
2. Corporations must impose the same rules on their CEOs as they do on everybody from the cleaning lady upwards: perform or get fired. It's not like the type of manager you're talking about needs a lot of inside knowledge. They are managing an oil company one year, nanotech research the next and a fast food chain two years after that.

In want to know what the market fundies (Hi Paladin!) have to say.

That doesn't change the point that the government forced Facebook to do as a public company what it was doing quite fine, and what Zuckerberg preferred to do, as a private company.

If your investors are private, you retain control by virtue of your preferred relationships with them. If the stock is floating around for anyone to purchase, that's a loss of control.

Were they new regulations? If not then he knew what he was doing but b/c he wanted capital he decided to take on new investors, triggering the IPO.