Ethos Foundation publishes the 17th edition of its proxy voting guidelines and corporate governance principles. The 2018 edition specifies the expectations of Ethos for approval of the remuneration reports of listed companies. In particular, Ethos expects companies to increase transparency as to the variable remunerations which were paid out upon vesting of the grants at the end of the performance period.
Increase in shareholder opposition in 2017: This is the conclusion of Ethos’ annual study on the general meetings, executive remuneration and corporate governance of companies listed in Switzerland. Overall, 14% of the resolutions received less than 90% support from shareholders, compared to 12% last year. The shareholders were particularly critical when voting on the remuneration of the board and management. In parallel to the publication of its study, Ethos also communicates its expectations for the draft revision of company law which is currently being discussed in Parliament.
Ethos has taken good note of Credit Suisse’s voluntary decision to reduce by 40% the variable remuneration of the executive management and to keep the board’s fees unchanged. In Ethos’ view, the remunerations are still too high in light of the CHF 2.7 billion loss posted by Credit Suisse in 2016.
In the run-up to the general meeting of Credit Suisse on 28 April 2017, Ethos opposes the re-election of several board members as well as the discharge of the board. In addition, in light of the poor results and the concerns regarding the bank’s capital ratio, Ethos also refuses the remunerations of the governing bodies and the dividend proposed by the board.
At the annual general meeting of Sika to be held on 11 April 2017, the Ethos Foundation recommends to support the reelection of the 6 board members not tied to the Burkard family. Those directors have demonstrated for more than two years their commitment in maintaining Sika’s independence against the hostile takeover by Saint-Gobain. Ethos however recommends not to grant the discharge and not reelect the three board members representing the Burkard family (Urs Burkard, Willi Leimer, Jürgen Tinggren). In addition, Ethos recommends to not newly elect Dr. Jacques Bischoff, a representative of SWH, whose candidacy to the board was submitted by the Burkard family after the deadline for inclusion in the AGM agenda.
The Ethos Foundation publishes the 16th edition of its proxy voting guidelines and corporate governance principles. In particular, the 2017 edition foresees that members of the executive management will no longer be accepted as board members. In addition, the maximum duration of the external audit firm’s mandate is set at 20 years in line with the practice adopted by the European Union. Regarding authorisations to issue capital for general purposes without pre-emptive rights, a single authority may not exceed 15% of issued capital down from 20% currently. Finally, the discharge will not be granted to the governing bodies, in particular when the company is in the situation of capital loss or over indebtedness.
The annual general meetings of Swiss listed companies have been shaped in the last two years by the implementation of the Minder initiative which foresees a binding vote on the pay for the governing bodies and the annual election of board members. These provisions have significantly increased pressure on boards. Ethos’ study on the 204 companies of the SPI Index shows that the transparency and structure of remuneration systems have substantially improved. Vincent Kaufmann, Ethos’ CEO, says “however, the absolute amounts in 2015 are up 2% and often remain high, especially with regard to company performance.”
Ethos will participate today in the annual general meeting of LafargeHolcim and recommend shareholders not to discharge the board, in particular due to the under-performance of the share price in comparison to the main competitors of more than 50% since the announcement of the merger in July 2014. Ethos also recommends voting against the 2015 remuneration report in light of the special remuneration granted to the chairman and the management for the merger. Finally, the board of 14 members lacks independence. Ethos therefore recommends not re-electing three members.
Ethos will make a statement at today’s annual general meeting of Credit Suisse. The remuneration seems too high in light of the CHF 3 billion loss recorded in 2015. In addition, in light of the ongoing litigation, Ethos recommends that shareholders oppose the discharge of the board members. Finally, given the level of core capital, which remains insufficient and given the significant uncertainty on financial markets, Ethos recommends that shareholders renounce to their dividend this year.
At the annual general meeting of Calida on 21 April 2016 the company’s second largest shareholder Micalux (Haas family, 16% of the capital) proposes to re-elect the former CEO Felix Sulzberger to the board. The board is opposed and instead proposes two new candidates, Stefan Portmann and Jean-Paul Rigaudeau. After hearing all concerned parties, Ethos supports the re-election of the seven members of the board (including F. Sulzberger) as well as the election of S. Portmann but is against the election of J.-P. Rigaudeau.