SWX Swiss Exchange reinforces executive remuneration disclosure

Following the introduction of the new article 663b bis of the Swiss Code of Obligations, the announcement by SWX on 26 July 2006 of the removal of most provisions of Chapter 5 of the DCG concerning remuneration disclosure had raised serious concerns in the investor community. However, the commentary published is reassuring, as it includes a detailed description of information which issuers will have to disclose in the Corporate Governance section of the Annual Report regarding the principles and elements of executive remuneration. Will be included in particular the following elements:

• The breakdown of fixed remuneration (cash, fixed number of shares or options, benefits in kind)
• The structure of performance based remuneration
• The relative part of fixed versus variable remuneration in percentage of base salary
• The precise performance metrics used for variable remuneration
• The share/option based incentive plans (allotment criteria, blocking period and for stock option plans in particular: duration of the plan, subscription ratio and exercise price) and their subsequent amendments if any.
• The severance payments for members of the Board and of executive management.

Ethos commends the decision of the SWX to reinforce the disclosure regarding executive remuneration. In its annual remuneration survey, to be published soon, Ethos will present a detailed framework of disclosure of the remunerations, in line with the commentary of SWX and the revised article of the Swiss Code of Obligations. The companies will therefore dispose of all the necessary elements to improve disclosure.

Moreover, in order to be really in line with international best practice rules, Ethos urges companies to put their remuneration report to an advisory vote of the shareholders, as recommended by the new Appendix of the Swiss Code of best practice issued by economiesuisse.