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The Rupp Report: Is Enough Now Enough?

Jürg Rupp, Executive Editor

In some funny places in the outside world, Switzerland is known as being a country full only of rich people with golden Swiss wristwatches eating Swiss (!) chocolate 24 hours a day. This by far is not true. However, in each rumor there is a grain of truth. Yes, there are rich people, but only very few, and mostly foreigners. Yes, they have golden wristwatches, but they are purchased mainly by tourists. Yet, this is true — They like their own chocolate.

Down-to-earth People
However, as the author is a native citizen of this country, he must say that Swiss people are very pragmatic and down-to-earth. If they don't like a situation, they go for the national sport: voting. And at the moment, there are truly historical things happening in Switzerland: Last Sunday — as happens four times a year — Switzerland was voting "yes" or "no." Mostly, it is about decisions proposed by the government.

However, one must know that the Swiss can also vote for or against in so-called referendums for virtually everything if the interested party of citizens can collect more than 100,000 signatures in the country. (See sentence above: "If they don't like a situation they go for the national sport: voting.) Frankly speaking, it is quite seldom that one of these referendums is accepted by the Swiss people — usually, the result is negative because the government also proposes a kind of counter proposal. And these counter proposals normally win.

Initiative Against Rip-off Artists
Some years ago, big Swiss companies started to copy the financial institutions' way of paying their top people. Compensation soared, with salaries and bonuses far higher than any common-sense compensation: Double-digit millions of Swiss francs were paid. Then, a few years ago, Thomas Minder, a Swiss entrepreneur — no, not a socialist — started a referendum to stop these outrageous payments. The referendum was and is called the "initiative against rip-off artists"- and this in Switzerland. Everybody was laughing at him, saying this cannot work, not in Switzerland, and so on. In no time, more than 100,000 signatures from all over Switzerland were collected and validated. Now, the story was serious.

The establishment was in trouble, and for the last two years, the government and the two legislative chambers tried to break this entrepreneur's will, asking him to put an end to the referendum. He didn't. Advertising campaigns costing multi-millions of Swiss francs were started to tell the people not to vote yes for this "anti-social initiative." Sunday, March 3, was the day of clearance and decision.

Lesson In Direct Democracy
And, as mentioned in the opening paragraph, a truly historical thing happened: The Swiss people voted "yes" to stop overrated payments and other financial extremes, taking nearly 70 percent of all votes. This kind of result has happened only three times since modern Switzerland was born in 1848.

Now, a quite strange situation for big companies will occur: among the 24 regulations listed in the initiative, every member of the board must be elected at the annual meeting by the shareholders — and they must set the payments, too. After the poll, the comments in the newspapers are arguing, "Thanks to the excesses of a few people, an entire industry has to suffer now" — whatever that means.

New Movement
But not only is Switzerland redirecting its activities against excessive payments and bonuses: The European Union has just signed a new law that in the future, financial people and top leaders will not be allowed to get bonuses that are above their annual salaries. Whether this is right or wrong is not for the Rupp Report to decide.

Nevertheless, it seems that the times are over when some people on some top floors are able to further increase their salaries without limits and treat the cash of their companies like selections at a self-service restaurant.

Once more, it is quite clear: today's people are much more educated than ever before. Modern media tools such as the often-cited social media like Facebook or Twitter are very powerful and can turn public sentiment totally — or 70 percent — upside down.

And Now?
On the one side, the Swiss citizens are now very keen to know how the government and the two chambers of the parliament will implement the new laws "word by word," and in 12 months' time, as it is written in the referendum text. On the other side, it is regrettable that such a ballot is needed to tell some people that the sky is not the limit, and that it's more about dignity and respect.

The Swiss minister of justice said after the publication of the referendum results that those results for the affected institutes and companies are quite a challenge. However, she also mentioned that the competitiveness of Switzerland is not only dependent on the stock corporation law.

And what could be the conclusion of this Rupp Report? Don't underestimate the common sense of people on Main Street; the last move in this chess game isn't completed yet. People on the top floors should always remember this fact.

March 5, 2013