Via the BBC:
Swiss voters have overwhelmingly backed proposals to impose some of the world’s strictest controls on executive pay, final referendum results show.
The measure has two important strands: shareholders will have a veto on executive remuneration and golden hellos and goodbyes will be banned. The former is a sensible, pro-market reform, the latter is not. Both are a response to what has gone wrong with capitalism.
It is entirely right that the owners of firms should control the actions and remuneration of employees, including directors. It’s what happens in privately-held firms and it should be available in listed firms too. Property ought to be the unity of ownership, control and risk if free markets are to function well. Just look at the behaviour of banks and their bailouts to know what damage is possible when ownership, control and risk, especially commercial risk, are separated.
However, control over property ought to include being able to incentivise your employees as you see fit. That’s why banning golden hellos and goodbyes and capping bonuses is a bad idea. Capping bonuses is reasonable in bailed-out, state-owned banks and that’s what the shareholders – governments – ought to do. It ought not to be necessary to explicitly ban or cap bonuses for all.