[ZURICH] Swiss lawmakers have watered down a proposal that would have installed a fixed upper limit on compensation at the country’s biggest banks including UBS Group.
In March, the upper house of parliament voted in favour of the Bill to cap salaries of top executives at Swiss banks at between 3 million francs (S$4.8 million) and 5 million francs per year.
That Bill has now been changed in the lower house, according to a statement from the parliament. That means the cap is unlikely to become law.
Executive compensation has become a hot button issue for Swiss politicians in recent years, especially after the demise of Credit Suisse. Finance Minister Karin Keller-Sutter has previously criticised the compensation of UBS chief executive officer Sergio Ermotti.
Chief executive officers at Swiss listed companies have seen significant pay raises since the Covid pandemic, according to a report by proxy advisor Ethos.
CEOs at SMI companies made 8.3 million francs on average in 2024, a 7.4 per cent increase compared to the previous-year period, it said.
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On the plan to cap banker salaries, the lower house’s committee for economy and taxation has removed a fixed upper limit from the text of the Bill, according to the statement. Instead the text now only states that “variable remuneration should not be paid if the business does not perform well”, it said.
The committee decision means that when the bill comes before the whole chamber, lawmakers will likely only vote on the softened version, unless a counterproposal is launched. A vote in parliament could come as early as next month.
The Swiss move chimes with a broader push in the region among jurisdictions not part of the European Union. In 2023, the UK scrapped an EU-era cap limiting bonuses to a maximum of twice a banker’s base pay.
Wall Street banks broadly welcomed the move, saying it would help the City of London’s appeal as a financial centre and mean firms could better align the paycheck structure of top bankers with the bonus-heavy packages of their New York counterparts.
The UK bonus cap was introduced by the EU back in 2014 in response to public outcry about the financial crisis. For most lenders, the cap meant their material risk takers – which can be investment bankers, traders, risk managers or even compliance personnel – could earn variable compensation that was equal to two times their fixed salary. BLOOMBERG
