Ethos published its detailed analysis and voting recommendations for the annual general meeting of Novartis to be held on 24 February 2009. In particular, under point 5.1 of the agenda, Ethos calls the shareowners to actively support its resolution requesting an advisory vote of the remuneration report.
The shareowners of a company should be given the right to express their views on the principles and mechanisms of executive remuneration. Most codes of best practice in corporate governance such as the code of OECD recommend that "shareholders should be able to make their views known on the remuneration policy for board members and key executives".
The resolution requests that the Board of Directors prepare a remuneration report each year and put it to the advisory vote of the shareholders at the annual general meeting. This is a system which has been functioning effectively in the United Kingdom since several years and which is also recommended by the Code of best practice of Economiesuisse (the largest umbrella organisation representing Swiss companies). The principle of an advisory (non binding) vote leaves to the Board the competency and responsibility of setting executive remuneration, while authorising the shareowners to express their opinion directly on the said remuneration.
Ethos is very surprised that Novartis' Board refused to disclose the supporting statement of Ethos and the eight proponents in the agenda of the general meeting. The Board however presented a 25-line text explaining its opposition to the resolution. This unequal treatment poses a serious problem, in particular in light of the Board's evident conflicts of interest in this matter.
The analysis of the agenda of Novartis' general meeting also includes a detailed analysis of the remuneration system and the structure of the particularly high levels of executive remuneration paid in 2008.
Ethos calls the shareowners to vote FOR its resolution presented under item 5.1 of the agenda of the annual general meeting of Novartis to be held on 24 February 2009.
