Corporations Requiring Shareholder Approval of Exec. Remunerations.

This article describes the detail to which citizens (in this case Swiss) can individually control or affect the operations of important institutions within their country – if the country has effective rules within which issues may be determined by referendum votes. You get the gist of it by referring to the extensive, 2014 “report of the Board of Directors on the Revision of the Articles of Association”  - of a very large, international, corporation – Nestle`s; (the chocolate etc. company).

         On March 3, 2013, the citizens of Switzerland approved an initiative of one citizen who had been dismayed by the compensation of which he had become aware  being given, to some   directors, of some Swiss companies.; this, despite some less than admirable financial results of such companies.   As a minor shareholder in such companies he had thought this was wrong -  as it was!

          And so, he determined to overcome that. After many months, drafting and re-drafting proposals, he had managed to get ten percent of the citizens to sign a petition requesting a vote on the subject. And the citizens ultimately approved what is now called – “article 95, para 3, of the Swiss Federal Constitution”. And following that the Swiss Federal Council (sort of the Swiss “executive” – a 7 person board), enacted the details required to put the law into operating effect. This was as of Jan. 1, 2014.

         It required that all Swiss corporations have a form of Compensation Committee, to, among other things, approve the compensation of the top directors and executive of  that corporation.  Nestle’s by-laws had to be extensively amended (with expected,   approval of the shareholders). That will  ensure that such bonuses – or even loans to such officers, will be within effective and proper control – by this separately elected compensation committee; and that such committee is to have a one-year term only – to ensure that its independence is actual, and not demeaned in any way. It can even determine performance criteria, around which such compensation would relate. There are many details within the new   proposed  bylaws  to ensure that it will all actually work.

         Such a good idea – as complex as its development must require! And this initiated by a single citizen!

         It just illustrates how a country can permit involvement of its citizenry in important issues, which otherwise might well not become enacted due to inertia, or lack of sufficient favour by the ruling elite.

         Would that we could empower our citizens in such fashion! But – then again, why not? All it needs is for a sufficient number of us to push a favourite party leader toward that direction. It is called “Direct Democracy”. When are we, in Ontario,  going to uphold our alleged rights as citizens within a democracy – to vote upon issues? Why don’t you be one of them to start the movement

Referendums or Rebellions?

         Revolts in Brazil, over the huge World Cup expenditures, have been in the news.  Considering the huge amounts spent, the uprisings are understandable, aren’t they? 

         Would it not have been better to have had a referendum about the issues?

         They did that in Kracow Poland, recently about a proposal to have the Olympic games held there. Apparently the citizens there voted against the idea – due to the   huge costs anticipated.

         That surely is  the right way to handle such issues, would not all of us who support the principle of democracy, agree? 

         Just why are not more referendums utilized throughout those parts of the world that are not autocratically led? It could be that they are not as democratic as they pretend to be.  Leaders of whatever persuasion seem to believe they have the power and right to do whatever they deem best for the people. And, they do not wish to be second-guessed by the very people they lead. 

         But, areas which have advanced their democratic processes to include the rights to initiatives and thence referendums, do seem to get along very successfully. That includes Switzerland, not just the country , but the cantons and municipalities. There, on March 3, 2013   the people voted not to increase a minimum wage. Citizens in a democracy must be trusted to understand what is best. That is what democracy is all  about.

         Almost half of the United States have frequent referendums  - which do not seem to upset the successful running of those states.

          Could we not expand the trust and understanding of more citizens if we permitted them to have votes on issues? Such vote would of course have to be binding upon the government. Apparently referendums in Italy are often just ignored by their legislators; and the Supreme Court would have to understand their role as interpreters of laws . Although it is extremely difficult to fulfill the strict conditions set out in British Columbia’s referendum laws, the courts there have interpreted at least one such effort with proper sympathy. Will more be forthcoming soon?

         Modern democracy seems to demand it, if we are to be governed by more than protests and rebellions.