The Exchange

If America Were Switzerland, These CEOs Could Lose Big

The Exchange
File photo of Mark Zuckerberg during a Facebook press event to introduce 'Home' a Facebook app suite that integrates with Android in Menlo Park
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Mark Zuckerberg, Facebook's co-founder and chief executive introduces 'Home' a Facebook app suite that integrates with Android during a Facebook press event in Menlo Park, in this California, April 4, 2013, file photo. REUTERS/Robert Galbraith/Files

If Switzerland is getting sick of fat-cat bankers, maybe a revolution really is brewing.

The tiny Alpine nation, long known as a haven for the rich, may soon enact a new law that would put strict limits on executive pay, with Swiss voters set to decide the fate of a “fair pay” initiative that would cap CEO salary at 12 times what the lowest-paid worker in a company earns. So if a company employs somebody earning a minimum wage of $10 an hour, the CEO’s salary would top out at around $250,000. For most of today’s big-company CEOs, that’s barely tip money.

About 36% of Swiss voters approve of the idea, while 54% oppose it, according to The Wall Street Journal. That means it might take a late rally by backers of the proposal before the Nov. 24 vote to put it over the top. Still, exorbitant CEO pay has become a hot topic virtually everywhere. In the United States, CEOs earn about 354 times the average worker’s pay, according to the AFL-CIO. That’s up from a 201-to-1 ratio in 1992 and a 42-to-1 ratio in 1982. CEO pay has skyrocketed at the same time average wages have stagnated, one reason the Securities and Exchange Commission will soon require public U.S. companies to disclose the ratio of a chief executive's salary to that of the average worker.

If the United States ever passed a law similar to the Swiss initiative, most CEOs of large companies would face a huge pay cut. We used data from compensation-research firm PayScale and other sources to determine who would lose the most. Here are the 10 CEOs of Fortune 100 firms who would face the biggest cuts:

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As big as a $32 million pay cut may sound, these figures understate the loss that pay limits would impose on CEOs, because they link recalculated pay to the median pay of a worker, not the lowest pay. They also include cash salaries and bonuses but not stock awards or other types of non-cash compensation, which can sometimes multiply base pay many times over.

That’s why the list doesn't include CEOs such as Mark Zuckerberg of Facebook (FB), who earned an almost uncountable $2.3 billion in total compensation in 2012, Apple’s (AAPL) Tim Cook ($144 million), Starbucks’ (SBUX) Howard Schultz ($118 million) or Oracle’s Larry Ellison ($78 million). At those stratospheric pay levels, CEOs would lose nearly all of their compensation under a Swiss-style plan (unless they started paying everybody $1 million a year or more).

Could such severe limits ever be enacted? In the U.S., probably not. Americans seem particularly tolerant of the super rich, largely because so many people imagine themselves as one of them someday. That’s why it’s hard even to raise taxes on the wealthy.

But if ordinary living standards continue to stagnate or fall, pressure will mount on companies to pay their CEOs a bit more modestly. And if Switzerland or any prominent nation institutes meaningful limits on pay, bosses everywhere will take notice.

The best way for CEOs to keep their paychecks fat may be to trim them every now and then, especially when the masses get restless.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success . Follow him on Twitter: @rickjnewman.

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