Businessman turned politician Thomas Minder championed the campaign to grant shareholders a right to veto the salaries of top managers. Some 67.9 percent of the electorate endorsed his initiative.
The result means that Switzerland’s controls on executive pay will be among the tightest in the world.
Economiesuisse had led the counter campaign and is seen as the big loser.
Its director, Pascal Gentinetta, sought on Monday to downplay the defeat, calling it a “statistical aberration and not a general trend”, according to Tages-Anzeiger.
Gentinetta saw the defeat as going back long before the start of the campaign when there was already massive support for the initiative, launched nearly seven years ago.
He also blamed the furore over the 72 million franc compensation package negotiated between Novartis and its outgoing chairman, Daniel Vasella.
“This is a direct democracy. Everyone can put their case and Mr Minder’s caught on,” Gentinetta said in an interview with Blick. “The ‘no’ camp got off to a bad start; there was 80 percent support for the initiative at first.”
“Minder hit a nerve, we have to hand it to him. But that was clear at the start of the campaign,” said Gentinetta.
The Economiesuisse director said the two sides would have to sit down to work out how to implement the initiative. “I’m counting on Minder’s support,” Gentinetta said.
Justin Szwaja, a senior manager in corporate compensation at Ernst and Young in Geneva, told The Local it would be some time before the final legislation came into effect, "particularly given the challenges in resolving some of the details".
A balance would have to be found between more stringent governance and practical implementation.
"Listed Swiss companies will start to review their compensation practices to identify areas of non-compliance with the Minder initiative," Szwaja said.
"We'd also expect compensation practices to be reviewed regularly to check whether they're aligned with business performance."
"Companies that actively engage with shareholders and their representative bodies should be better placed to understand their views and ultimately gain shareholder support," the manager said.
Szwaja doesn't expect an exodus of firms from Switzerland in the wake of the legislation.
"We don't expect the opportunities Switzerland has to offer will change or that businesses will exit for one reason only," he said.