33 out of the 100 largest Swiss listed companies will implement an advisory vote of the remuneration report or system at their 2011 annual general meeting. In 2010, only twenty companies conducted such a vote. This progression is due in particular to the efforts of Ethos Foundation and shows the companies' self-regulation effort. More progress is however needed to meet the expectations of institutional shareholders and avoid the introduction of new regulations.
Two thirds of the 100 largest Swiss listed companies still do not propose an advisory vote of executive remuneration. Dominique Biedermann, executive director of Ethos Foundation said “Too many companies still do not give their shareholders a say on executive pay. This is regrettable in light of past years' excesses and the risk entailed by a remuneration system which is not well structured. More regulation will follow.”
Ethos' proxy voting guidelines underpin the voting recommendations
With 33 «Say on Pay» votes in Switzerland during the next proxy season, investors will particularly focus on executive remuneration. Other issues too, such as the elections to the board of directors, the discharge of the board or capital increases require a professional analysis to allow voting in an informed manner. To this end, Ethos updated its corporate governance principles and proxy voting guidelines to reflect the most recent best practice developments. Ethos' proxy voting guidelines are available on Ethos website and the voting recommendations for Swiss companies are published two days before the general meeting.
Insufficient participation in general meetings
Enhanced rights with regard to executive remuneration should be accompanied by an active exercise of those rights, which has not always been the case in 2010. The average participation rate at Swiss companies' general meetings of 55% shows that shareholders do not take seriously enough their duty to defend their long term interests. Ethos is convinced that institutional investors such as pension funds should be required to systematically exercise their voting rights. Contributing to the long term success of a company is of the remit of both its management and its shareholders.
