PhillyDeals: Surprising Swiss pay decision: What affect here?

FILE - In this June 12, 2007 file photo Edward Breen, chairman and CEO of Tyco International Ltd., is interviewed at the New York Stock Exchange. Foreign executives who moved their company headquarters to Switzerland to get better tax deals for their firms may find themselves paying the price for it this weekend. A plan to crack down on excessive corporate pay packages is predicted to pass at the ballot box Sunday, March 3, 2013. (AP Photo/Richard Drew, File)
FILE - In this June 12, 2007 file photo Edward Breen, chairman and CEO of Tyco International Ltd., is interviewed at the New York Stock Exchange. Foreign executives who moved their company headquarters to Switzerland to get better tax deals for their firms may find themselves paying the price for it this weekend. A plan to crack down on excessive corporate pay packages is predicted to pass at the ballot box Sunday, March 3, 2013. (AP Photo/Richard Drew, File)
Posted: March 07, 2013

Switzerland ranks with Delaware and the Cayman Islands as a business-friendly legal environment.

So it was a surprise, from this distance, to see every district in that wealthy mountain nation vote to approve a proposal by a Swiss senator , Thomas Minder, an organic-toothpaste baron, to force companies to vote each year on pay levels for bosses and corporate directors, and to outlaw the fat signing, merger, and severance bonuses that have lately enriched Swiss medical-supply and banking moguls.

Big U.S.-run companies that use Switzerland as their headquarters of convenience now have to decide if they will keep their legal bases there.

At Tyco InternationalLtd., based in Switzerland but run from near Princeton, retiring chief executive Ed Breen of New Hope took home more than $30 million last year.

"We will assess the impact on Tyco," spokesman Brett Ludwig told me, when "there is a more detailed understanding of the regulations. Once enacted, we will ensure that Tyco is in compliance with the law."

ACE Ltd., also nominally based in Switzerland, is run by Evan Greenberg, who collected $17 million last year while working from New York. ACE is the successor to the old Insurance Co. of North America. ACE won't comment on the Swiss vote, spokesman Stephen Wasdick said.

ACE has moved before. The company was previously incorporated in both the Caymans and Bermuda, whose attributes include low taxes and speedy incorporation services.

Shrunken legacy

"We're not moving. We're not closing. Everything else is on the table," says Girard College headmaster Clarence Armbrister of the North Philadelphia boarding school - elementary and secondary - for poor children set up by Stephen Girard in his will.

"Everything" could include, for example, a moratorium on accepting new students for a year or two, or ending the residential program and becoming a day school, or finding a way to restore the seven-day boarding program (it now closes on weekends), or starting a capital campaign for $100 million in overdue renovations - or other choices consultants are reviewing.

The city-run Girard Trust's $224 million investment pool - down from a peak of $330 million before the 2008 crash and a series of debt restructurings - no longer yields enough for the school's annual budget, forcing managers to spend down its principal and endangering its survival.

To cut annual spending below the unsustainable $20 million or more a year, the board has laid off staff and cut new enrollment to 24 students each year. That brings enrollment to around 400 students, down from 753 in 2007. Expenses will be down to $17 million this year - still too high, says the board.

Much of the one-million-square-foot campus is vacant and awaiting rehabilitation.

Board investments chief Joseph Martz says the Girard Estate's anthracite coal lands in east-central Pennsylvania have resumed mining, boosting income from that source from nothing in 2007 to $1.9 million in 2013. But that's still not enough to balance the books.

Armbrister, Martz, and Board of City Trusts Chairman Ronald Donatucci have been meeting with students, parents, alumni, and other "stakeholders" to emphasize the financial situation.


Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or on Twitter @PhillyJoeD.

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