Swiss voters rejected a proposal to limit executives’ pay to 12 times that of junior employees yesterday, a measure that would have gone further than any other developed nation.

The measure was opposed by 65 percent of voters, the government in Bern said yesterday. Polls, including one by consulting firm gfs.bern, had signaled that outcome as probable. Voter turnout was 53 percent, the highest in three years.

“It’s a big relief,” Valentin Vogt, president of the Swiss Employers’ Association, said in an interview on Swiss national television SRF. “It’s a signal that it’s not up to the state to have a say in pay.”

Switzerland is the home to at least five of Europe’s 20 best-paid chief executive officers. Opposition to excessive pay has stiffened among the traditionally pro-business Swiss following the government bailout of UBS AG, Switzerland’s biggest bank, in 2008 and a plan — later scrapped — by Novartis AG to pay outgoing Chairman Daniel Vasella as much as $78 million.

In March, Swiss voters approved the so-called fat-cat initiative that gave company shareholders a binding vote on managers’ pay and blocked golden handshakes and severance packages.

While polls after that vote suggested the 1:12 initiative could pass, support waned, in part because of opposition by company executives, such as Roche Holding AG CEO Severin Schwan and ABB Ltd. chief Ulrich Spiesshofer, who said it would crimp competitiveness and damage the economy.

‘Absurd’ Proposal

Speaking at a news conference in Bern yesterday, Economy Minister Johann Schneider-Ammann said the intended pay curbs were “absurd” and welcomed the voters decision. “We know there would have been lots of ways to circumvent the restrictions,” he said. “Switzerland stays attractive as a business location.”

The vote highlights discontent with managers in Europe, where unemployment soared to a record and banks have received taxpayer-funded bailouts.

“We’ve lost” for now, Young Socialist party leader David Roth, one of the initiators of the proposal, told SRF. “But we’ll continue to fight long term.”

Among the group’s initiatives is one for a national minimum wage. A date for the vote hasn’t been set.

Supporters of the 1:12 initiative said it only would have affected 0.3 percent of all Swiss companies and 3,400 managers. Switzerland is home to Europe’s largest drugmakers as well as the headquarters of the world’s largest oil traders Glencore Xstrata Plc and Vitol SA.

Growing Discontent

Switzerland is the world’s second-most competitive country behind the U.S., according to an annual ranking published by IMD’s World Competitiveness Center. The Swiss also have the highest gross average monthly wage in Europe at about $7,766, the most recent UN data shows.

The measure would have been “a much stricter rule than in other countries,” said Robert Pozen, a senior lecturer on business administration at Harvard Business School. Pozen commented before the results were announced.

Reining in huge executive payouts has found appeal outside Switzerland. In Spain, the country’s Socialist party is proposing measures similar to the 1:12 imitative.

In Germany nearly three quarters would support such pay curbs, according to a poll by GfK commissioned by the newspaper Welt am Sonntag. German Chancellor Angela Merkel’s party bloc agreed in a coalition draft accord to tighter limits on executive pay, Bild am Sonntag reported yesterday.

Switzerland ranks higher in income equality than the average of 34 countries in the Organisation for Economic Co- operation and Development, according to OECD. The gap between the wealthiest 10 percent and the poorest is smaller than in Japan, the U.K., the U.S. and Canada, the OECD data showed.

Ballot initiatives are common in Swiss politics, on issues ranging from healthcare to European Union membership. At least 100,000 signatures are needed for an initiative to come up for a national vote. Most voters cast their ballots by mail.

–With assistance from Patrick Winters in Zurich and Eshe Nelson in London. Editors: Zoe Schneeweiss, Jeffrey St.Onge