Official results showed that 67.9 percent of voters had backed the so-called “fat cat initiative”, one of the highest approval rates ever for a popular initiative.
Under the initiative, shareholders will be given veto power over executive pay proposals and companies will no longer be able to pay out so-called “golden hellos” for new hires or “golden handshakes” for executives who leave the company.
The initiative will be written into the Swiss constitution and apply to all Swiss companies listed domestically or abroad. Executives who violate the terms can be punished with as long as three years in jail.
Thomas Minder, the businessman and senator who proposed the initiative in 2006, said he was not surprised the vote passed. "The people have decided to send a strong signal to boards, the Federal Council (Swiss government) and the parliament," Minder told Swiss broadcasters on Sunday.
According to Minder, his proposals were aimed at ending a culture of short-termism and the practice of rewarding managers of badly-run companies. He added:
One of the organisers of the referendum, Brigitte Moser Harder, told the BBC she thought the Swiss people agreed with the proposals because the gap between rich and poor had become wider. "From the beginning, 2006, we had the support of the people of Switzerland because you know not everybody in Switzerland is rich.”
However, Swiss business groups like Economiesuisse warned the proposals “marked a deterioration of what was once a liberal set of rules on corporate governance” and the changes would damage the country’s competitiveness and scare away international talent.
The vote came just days after European Union struck a provisional deal to ban bonuses that are more than twice bankers’ fixed pay and countries including the United States and Germany have introduced advisory “say on pay” votes.
Simonetta Sommaruga, Switzerland's justice minister, said adopting the new rules would be a "serious challenge" for Swiss business, but expressed confidence that the country’s fabled competitiveness would not be undermined.
"Switzerland's appeal doesn't just depend on its corporate laws," she said, citing the country's ability to innovate, its educated population and its quality of life as other important attractions.