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The Fatter the Cat, the Louder the Howl

By: Mike Shedlock | Monday, March 4, 2013

Bloomberg reports Swiss Voters Approve Limits on 'Fat Cat' Executive Pay

Swiss voters approved some of the world's toughest limits on executives' pay in a referendum, a move critics say could make Switzerland less attractive to multinational corporations. The initiative against "fat cats," proposed by Thomas Minder, head of a herbal toothpaste company, was backed by 67.9 percent of the voters today, the government said on its website today.

The proposal gives shareholders an annual ballot on managers' pay. It eliminates sign-on bonuses, as well as severance packages and extra incentives for completing merger transactions. The initiative also includes rules punishing executives who violate the terms with as long as three years in jail.

How much executives take home was called into question in Switzerland after the country's biggest bank, UBS AG (UBSN), had to be bailed out during the financial crisis, while in 2010 Credit Suisse (CSGN) CEO Dougan received 71 million francs ($76 million) of shares. That compares with a gross average Swiss monthly wage of $7,800 for 2011, according to UN statistics.

Fat Cats Respond

Unsurprisingly, the fatter the cat, the greater the opposition to "fat cat laws". However, that does not address the primary question at hand.

Is Executive Pay a Problem?

Before finding solutions, we must first understand the problem. Is executive pay a problem?

The answer (that too few see) is executive pay is a "symptom of a problem" not the "real" problem.

Three Real Problems

  1. Fractional reserve lending
  2. Central bank "too big to fail" policies
  3. Government spending out of control

Want to rein in excesses at corporations? Then fix the real problems and the executive pay problem will mostly take care of itself.

For further discussion, please see


Author: Mike Shedlock

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Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit to learn more about wealth management for investors seeking strong performance with low volatility.

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