Since the entry into force of the Ordinance against excessive remuneration (the Minder initiative), the different votes on board and executive remuneration are the proposals most contested by the shareholders, which is reflected in a stabilisation of overall remuneration in SPI companies and a slight decrease in the largest listed companies.

During the first half of 2018, 187 annual general meetings and five extraordinary general meetings of companies included in the Swiss Performance Index took place. The average attendance rate of shareholders has remained stable for 4 years at 66% of the voting rights. Part of the absenteeism is explained by the low participation of mutual funds in general meetings. In contrast to other countries, mutual funds under Swiss law are not obliged to exercise their voting rights.

In total, more than 3,500 proposals were put to the vote in 2018 with an average approval rate of 96.6%. 27 proposals voted in companies with a controlling shareholder (holding at least one-third of the voting rights) would not have been approved had the sole vote of the other shareholders been taken into account.

Proposals relating to board and executive remuneration remain particularly contested. The advisory vote of the remuneration report received 87% approval on average, while more than 21% of the remuneration proposals received less than 80% affirmative votes.

Ethos' voting recommendations are published on its website and are based on its 2018 guidelines, which are also publicly available. During the 2018 proxy season, Ethos advised more than 200 Swiss institutional investors representing Swiss equities exceeding CHF 40 billion. Ethos recommended to approve 81.6% of the proposals (81.0% in 2017). In general, the items for which Ethos recommended to oppose were approved by 90.6% of the votes while those for which Ethos recommended approval vote were approved by 97.7%.

Remunerations decreasing in SMI companies

Average remuneration remained almost unchanged overall, but with strong variations depending on the size of the companies. In particular, the average 2017 remuneration of the CEOs of the SMI companies decreased by 7% to CHF 6.8 million while that of the CEOs of the following 27 companies (SMIM index) decreased by 8% to CHF 3.7 million.

A stabilisation of board and executive remuneration has now been observed over the last 3 years, which tends to confirm that the rights granted to shareholders in the area of remuneration since the Minder initiative was implemented make it possible to curb excesses. However, certain levels of remuneration remain too high and not always in line with the performance of companies. Thus, in accordance with its guidelines, Ethos recommended to oppose 35% of the binding votes on the remuneration of the board of directors and 33% of the binding votes on the remuneration of the executive management.

In particular, within the financial sector, the link between pay and performance is not demonstrated. The stability of the remuneration of board and executive remuneration in this sector contrasts with the nearly 44% decrease in net income since 2009 of the 26 financial companies among the 100 largest Swiss caps and the 7% decline in the number of employees of these companies.

The sustainability report: a major missing part of the reporting of listed companies

Shareholders must also approve annual reports and company accounts. More and more investors expect companies to be more transparent about extra-financial topics, such as risks related to climate change or respect for human and labour rights, particularly in the supply chain. Since 2018, companies can announce to the Swiss stock exchange the existence of a sustainability report (opting in) provided that this report is drafted in accordance with a recognised standard. This proposal allows investors to know which companies are publishing standardised sustainability reports. Ethos notes that, unfortunately, as of today only 13 companies out of more than 200 listed companies in Switzerland have declared the existence of such a report to SIX Swiss exchange. Despite the urgency of climate risks and many social issues, self-regulation is currently still far from being effective.

Ethos’ presentation: Main results of «2018 general meetings and 2017 remuneration in SPI companies» (in French)

Ethos’ presentation: Main results of «2018 general meetings and 2017 remuneration in SPI companies» (in German)

Half year report of Ethos’ proxy voting recommendations

Ethos’ 2018 Proxy voting guidelines

Corporate Governance
General meetings