The ethos Investment Foundation and five large Swiss public pension funds demand that Nestlé observe best practice with regard to its corporate governance: To this effect they will submit three shareholder resolutions at Nestlé’s forthcoming Annual General Meeting, to be held on the 14th of April 2005. The most important resolution will require a formal separation of the roles of Chairman and CEO.
Nestlé’s decision to introduce a combined position of Chairman/CEO by electing its CEO, Mr. Peter Brabeck-Letmathe, to the post of Chairman is not in line with corporate governance best practice. When these two offices are combined, the balance of power between management and control can be seriously impaired and the objectivity of the board and its independence from management jeopardized. It might therefore become difficult for the board to carry out, with the required diligence, its task of oversight of management conferred by Swiss law.
As Peter Brabeck’s mandate runs until 2007 and the chairman is chosen by the members of the board, shareholders do not have any say regarding this central question of combining the two roles. Given this situation, the ethos Investment Foundation, the Pension Fund of the City of Zurich, the Pension Fund of Lucerne, the Pension Fund of the Canton of Jura (Porrentruy), and the two Geneva-based Pension Funds CEH and CIA have decided to present three shareholder resolutions at Nestlé’s Annual General Meeting, to be held on the 14th of April 2005.
The three resolutions request the following amendments to Nestlé’s Articles of Association: First, the chairman of the board should be prohibited from simultaneously holding an executive function. Secondly, the length of board mandates should be reduced from 5 to 3 years and, finally, the threshold of capital required for shareholders to be able to place an item on the agenda of the general meeting should be lowered from CHF 1 million to CHF 100’000- shares in nominal value.
The six shareholders together hold Nestlé shares amounting to more than CHF 1 million (USD 840 thousand) of nominal value, corresponding to a current value of over CHF 300 million (USD 250 million). Thereby they have fulfilled the high requirements for proposing resolutions at the general meeting.
The objective of these resolutions is to enable all of Nestlé’s shareholders to take a stance on a number of particularly important aspect’s of Nestlé’s corporate governance structure. Shareholders will therefore be able to decide if they want to support the proposals for improving the corporate governance of the Nestlé concern. “The upcoming Annual General Meeting of Nestlé provides an opportunity for pension funds and other shareholders to realise what influence they can have. By actively exercising their shareholder voting rights, they can take responsibility for a positive long-term development of their company.”
The resolutions are jointly supported by :
- ethos Investment Foundation (Geneva)
- Pension Fund City of Zurich (Zurich)
- Pension Fund of Lucerne (Lucerne)
- Pension Fund CEH (Geneva)
- Pension Fund CIA (Geneva)
- Pension Fund of the Canton Jura (Porrentruy).
