Nestlé raps Swiss move on ‘fat cats’

NESTLÉ’s chairman said yesterday Switzerland was becoming more difficult as a business location after voters last month approved some of the world’s toughest limits on executives’ pay.

“The political and regulatory environment for publicly listed companies is becoming more difficult in this country,” Peter BrabeckLetmathe told shareholders at the company’s annual general meeting in Lausanne.

The initiative against “fat cats”, proposed by Thomas Minder, head of a herbal toothpaste company, was backed by 67.9% of the voters in a March 3 referendum. The measure would give shareholders an annual ballot on managers’ pay, eliminates sign-on bonuses, severance packages and extra incentives for completing merger transactions. The initiative includes rules punishing executives who violate the terms with as long as three years in jail.

“It is now crucial to respect the Swiss voting population’s decision and to find practical legislative solutions which safeguard the longterm attractiveness of Switzerland as a business location,” Mr Brabeck said in his speech.

Nestlé, the world’s biggest food company, has invested more than Sf3.2bn ($3.44bn) in Switzerland over the past 10 years, boosting its headcount there by 3,500 to more than 10,000, he said. More than 60% of the company’s global research and development spending is in its homeland. “Nestlé wants to stay in Switzerland,” he said, adding that the country’s long-term stability is “constantly being challenged.”

The government has said it will issue directives to implement the Minder initiative within the next year. Parliament will then need to amend national laws.

Nestlé said in February it expected 2013 to be as challenging as last year, when sales missed analysts’ estimates on a slowdown in emerging markets, the source of more than 40% of its revenue.

Brabeck’s total compensation in 2012 was Sf6.97m, while CEO Paul Bulcke was paid Sf9.97m, says Nestlé’s annual report. Bloomberg