Initiative Against Fat-Cat Salaries becomes law: Ordinance enters into force on 1 January 2014

Bern, 20.11.2013 - On Wednesday, the Federal Council determined that the Ordinance Against Excessive Remuneration in Listed Companies Limited by Shares will come into effect as of 1 January 2014. Article 95 para. 3 of the Federal Constitution, which derives from the popular initiative "Against Fat-Cat Salaries", will thus come into force two months earlier than required. The new Ordinance affects listed companies and pension institutions.

In view of the large number of submissions to the hearing, amendments were made to several points of the preliminary draft of the Ordinance Against Fat-Cat Salaries.  The title of the Ordinance was also changed and is now the Ordinance Against Excessive Remuneration in Listed Companies Limited by Shares (ERCO).

General meeting votes on remuneration

Under the new provisions, in future a company's general meeting will vote on an annual basis on remuneration for the members of the board of directors, board of advisors and executive board. The outcome of these votes is binding. Merely consultative votes are not permitted. Companies must set the details of such votes down in their articles of association, along with the procedure to be followed if proposed remuneration is rejected.

Certain payments are prohibited

In the future severance packages, bonuses for internal restructuring and advance payments will all be prohibited, neither will they be permitted for activities on behalf of another company in the same group. Signing bonuses will still be allowed, however.

Compared with the preliminary draft, the criminal provisions of the Ordinance have become more nuanced, with penalties aligned more closely to the illegality of conduct in each case. Provision for the maximum sentence of three years' imprisonment and a fine now applies only if members of the board of directors, executive board or board of advisors make or receive unlawful payments. They must also have been acting "against their better knowledge", i.e. with direct intent.

Pension institutions to disclose how they vote

Pension institutions must vote on the points laid down in the Ordinance. They must also exercise their voting rights in the interests of their insured members. They are not permitted to decide in advance of the general meeting that they will not vote, but once there they may abstain from voting on individual agenda items. Pension institutions must also disclose transparently how they have exercised their voting rights, although details must be given only if they have not voted in favour of a proposal by the board of directors, or if they have abstained.

Transitional provisions

The provisions of the Ordinance apply from 1 January 2014, although a transitional period is granted in several areas. This gives companies and pension institutions the time that they need to amend their procedures, articles of associations, internal regulations and contracts to the mandatory requirements of the Ordinance. Listed companies limited by shares are not required to have amended their articles of association and internal regulations until the second annual general meeting after the Ordinance comes into force, for example.

Address for enquiries

Federal Office of Justice, T +41 58 462 48 48


The Federal Council

Federal Office of Justice

Federal Department of Justice and Police

Last modification 11.06.2024

Top of page

News subscription

You can subscribe to the FOJ's media releases by e-mail on the Swiss government portal