Continuous wages, notice periods, non-competition clauses or cumulative bonus payments: all of the means used by companies listed on the stock market to “seriously circumvent the ban on severance pay,” according to Unia. In its investigation into the pay gap published this Friday, the union notes that the initiative against excessive remuneration known as Minder accepted by the people at 67.9% in 2013 does not prevent certain drifts.
To support his remarks, Unia gives three examples. Ulrich Spiesshofer, who left the management of ABB in April 2019, will receive 13 million francs by April 2021. The former director of Credit Suisse, Tidjane Thiam, dismissed after the scandal of spinning, could meanwhile receive deferred premiums of 30 million francs, reports the union, citing the NZZ, which corresponds to three annual salaries. Finally, Richard Ridinger received 4.745 million francs for his last two months at the helm of Lonza in early 2019, more than what his successor received in nine months.
Also read: “Large Swiss companies bypass the Minder initiative”
An order subject to interpretation
The whole problem lies in the definition of what constitutes or not a severance pay, indicates to the Time Marco Villa, lawyer specializing in commercial and contractual law: “The order against excessive remuneration in public limited companies listed on the stock exchange (ORAb) clearly prohibits the severance payments agreed contractually and those provided for in the statutes, while specifying that the compensation due until the end of the contractual relationship are not considered severance pay. This opens the door to certain interpretations. ”
Marco Villa also specifies that it is normal for a dismissed manager to be paid during his period of leave, fixed at one year maximum by the ORAb. To this can be added non-competition contracts with a maximum duration of three years, according to the Code of Obligations. In the case of Ulrich Spiesshofer, ABB paid him a salary of 8.58 million between April 2019 and April 2020, to which is added compensation of 4.47 million for a non-competition clause valid until April 2021 .
For Erich Herzog, member of the management of Economiesuisse, “it is now up to the shareholders, as the people wanted to vote, to fix the remuneration they deem correct, while respecting the laws in force”. Without commenting on cases of which he says he is not aware, he recalls that “the federal parliament validated last Friday the revision of the law on public limited companies”. This reform anchors the requirements of the initiative against excessive remuneration and maintains the ban on severance pay.
Business lawyer Christoph Wilhelm says that the companies concerned are very closely watched by their shareholders, their auditors and their lawyers, and that they are very careful not to be exposed to criminal sanctions which could tarnish their image.
Read again: Remuneration methods at the dawn of major upheavals
Unia does not envisage criminal complaints
Marco Villa also recalls that any person or organization suspecting an abuse in this area is free to lay a criminal information and to invite the criminal authorities to initiate proceedings. When contacted, Unia indicated that it had not taken any steps in this direction: “A complaint would not change anything, since these companies take advantage of existing loopholes in the current law.” Vincent Kaufmann, director of the Ethos Foundation, says that he has never observed such a procedure, “the cost of which would be very high and the chances of success reduced given the lack of clarity in the law”.
Unia however expects shareholders of listed companies to be more sensitive to the differences between high and low salaries, as well as to their compensation policy. According to him, the bosses and shareholders of 33 Swiss companies listed on the stock exchange received 63 billion dividends in the middle of a pandemic, while these companies received aid from the Confederation. He believes that “under these conditions, there should be no drop in income or layoffs for employees”.
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