**Swiss Lawmakers Scale Back Executive Pay Cap Proposal**
Swiss lawmakers have revised a proposal aimed at establishing a fixed upper limit on executive compensation at the nation’s largest banks, including UBS Group AG. Initially, in March, the upper house of parliament supported a bill that would cap salaries for top executives at Swiss banks between 3 million and 5 million francs annually. However, recent changes made in the lower house suggest that this cap is unlikely to be enacted into law.
The issue of executive compensation has gained significant attention among Swiss politicians, particularly following the collapse of Credit Suisse. Finance Minister Karin Keller-Sutter has previously expressed concerns regarding the pay of UBS CEO Sergio Ermotti. A report from proxy advisor Ethos indicates that chief executive officers at Swiss listed companies have experienced substantial salary increases since the onset of the COVID-19 pandemic. In 2024, CEOs at SMI companies earned an average of 8.3 million francs, reflecting a 7.4% rise compared to the previous year.
In the latest revision, the lower house’s committee for economy and taxation has eliminated the fixed upper limit from the bill. The revised text now states that “variable remuneration should not be paid if the business does not perform well.” This modification implies that when the bill is presented to the full chamber, lawmakers will likely only consider this softened version unless an alternative proposal is introduced. A parliamentary vote could occur as soon as next month.
This development in Switzerland aligns with a broader trend in regions outside the European Union. In 2023, the UK abolished an EU-imposed cap that limited bonuses to a maximum of twice a banker’s base salary. This change was welcomed by Wall Street banks, as it enhances London’s attractiveness as a financial hub and allows firms to better align their compensation structures with those of their New York counterparts. The UK bonus cap was initially implemented by the EU in 2014 in response to public backlash following the financial crisis, restricting material risk takers—such as investment bankers and traders—from earning variable compensation exceeding twice their fixed salary.
In summary, the recent adjustments to the executive pay cap proposal in Switzerland reflect ongoing debates about compensation practices in the banking sector, with potential implications for the financial landscape in the region.
**FAQ**
**What changes were made to the executive pay cap proposal in Switzerland?**
The Swiss lower house removed the fixed upper limit on executive compensation from the proposal, stating that variable pay should not be awarded if business performance is poor.
