The Swiss Government recently hinted that it intends to make a proposal to Parliament to give rights to the shareholders with respect to executive remuneration in listed companies, in particular the right to vote the envelope of fees of the members of the Board of Directors. Ethos commends this proposal but asks that shareholders be also given the rights with regards to the remuneration of executive management. Ethos wishes that the vote by the shareholders of share based incentive plans and of the remuneration report be stipulated by Swiss Company Law, as is already the case in other countries.
The shareholders must be allowed to vote on the remuneration system of listed companies. The proposal of the Government to introduce the vote of the envelope of Directors' fees is an important breakthrough in terms of shareholder rights in Switzerland. However, this measure remains insufficient as it includes no proposal regarding the remuneration of the executive management which is generally more contentious than the remuneration of the Directors.
To complement the proposal of the Swiss Government, Ethos asks that the general meeting of shareholders be given the following additional rights:
- Right to vote the share based incentive plans. This principle is recommended by the OECD and is already in force in several countries, such as the USA, the United Kingdom, the Netherlands or France.
- Right to vote every year the remuneration report separately from the annual report, as is the case in the United Kingdom, the Netherlands, Australia and Sweden. This measure is under discussion and could also be introduced in the USA in the near future.
Ethos is convinced that an enhancement of shareholder rights with regard to executive remuneration is necessary to restore investor confidence and establish the necessary bases for the efficient operation of financial markets.
