Ethos’ Say on Pay Resolution Accepted by Zurich Financial Services and Swiss Re

Following the dialogue between Ethos and the targeted companies, Zurich Financial Services and Swiss Re have accepted to pro-actively submit their remuneration system/report to an advisory vote of the shareholders at their 2010 annual general meeting. However, the resolution will still be maintained on the agenda of the annual meetings of Novartis (26 February 2010) and Holcim (6 May 2010).

Ethos Foundation commends the decision of two of the targeted companies to give the shareholders a say on executive remuneration. According to Dominique Biedermann, Executive Director of Ethos, “this is a step toward better self regulation with regard to executive remuneration and enhanced shareholder democracy in Switzerland”. Following the decision of ZFS and Swiss Re, 8 companies out of the 20 included in the SMI Index have accepted to implement a vote on their remuneration report/system (see table below).

Zurich Financial Services committed to put its remuneration system for 2010 to the advisory vote of the shareholders, whereas Swiss Re will propose a vote on their 2009 remuneration report. The vote will be advisory, as currently Swiss company law does not permit a binding vote. Ethos considers that an advisory vote still allows the investors to send a strong signal to management with regard to executive remuneration.

The two companies must now disclose sufficient information in advance of the meeting in order to allow the shareholders to make an informed decision regarding the remuneration system/report. Ethos will analyse the remuneration policy and make voting recommendations in line with the criteria set in its proxy voting guidelines.

Support Group with CHF 600 billion in assets under management

In order to obtain maximum endorsement of its request for enhanced shareowner rights with regard to executive remuneration, Ethos established a support group for its Say on Pay resolutions which now includes approx. 30 Swiss and non Swiss institutional investors with more than CHF 600 billion (EUR 400 billion) in assets under management. Among the non Swiss investors one can find APG of the Netherlands, the largest pension fund in the world, three among the Swedish national pension funds (AP1, AP3 and AP4), as well as the pension fund of British Railway (Railpen).

Ethos and the eight Swiss pension funds maintain their Say on Pay resolution at the general meetings of Novartis (26 February 2010) and Holcim (6 May 2010) and urge all shareholders to cast an affirmative vote.

Companies included in the Swiss SMIIndex: Advisory vote on the Remuneration System/Report at the 2010 Annual General Meeting (as of 8.1.2010)