Backers of the "1:12 initiative" argued that imposing a legal limit on salaries would ensure greater fairness while still giving top bosses the chance to earn more money than, for example, government ministers.
But Swiss business leaders argued it would weaken the nation's competitiveness, make it harder to attract top talent and likely prompt some companies to move executives abroad.
Opponents included Sepp Blatter, the Swiss president of world soccer's governing body FIFA, who argued that it would have the side-effect of seriously damaging Swiss soccer.
"Of course we're disappointed," Young Socialist leader David Roth told Swiss television.
"Our opponents succeeded in making people afraid," he said, though he insisted that there was "no future" for an "economic system based on salaries in the millions, on financial speculation."
The head of Switzerland's employers' association said he was greatly relieved.
"This is an important decision for Switzerland as a business location," Valentin Vogt said. "The people have decided clearly that setting salaries in this country is not a matter for the state."
- AP