The Shareholder ForumTM


"Say on Pay" Proposals

Forum Home Page

"Say on Pay" Home Page

Program Reference


SwissInfo, January 23, 2009 article


January 23, 2009 - 6:02 PM

Major firms agree to vote on top salaries



Executive pay at listed companies has become a source of major concern for shareholders in recent years.

Ethos says that a number of practices are a "far cry" from the rules of good governance.

It points out that an excessive remuneration policy is an undesirable cost that has a strong negative impact on company results.

Ethos also says it can also greatly influence the risk-taking behaviour of some managers and, indirectly, the company's strategic orientation.

It is therefore "perfectly legitimate" for shareholders to have a say on the basic principles and mechanisms of remuneration policy.


Ethos resolution text
Proposed amendment to the Swiss articles of incorporation:

"The Board of Directors shall establish a remuneration report each year for the annual general meeting. The report shall present the remuneration system and payments made during the previous financial year to members of the Board and members of executive management."

"Each year, the general meeting of shareholders shall have an advisory vote on the remuneration report."

Shareholders of three major Swiss companies are to have a right to express their views on the controversial issue of executive pay – a first in Switzerland.

The Ethos Foundation for Sustainable Development in Geneva says that food giant Nestlé and the country's two big banks, UBS and Credit Suisse, have agreed to an advisory vote on management remuneration.

The votes will be advisory because currently Swiss law does not permit a binding vote.

However, two other firms asked last September by Ethos and eight pension funds to introduce a "Say on Pay" measure for shareholders - engineering group ABB and the Basel pharmaceutical concern Novartis - have refused to introduce the measure.

Executive pay, considered excessive by many, has been a thorny issue in Switzerland for years and has been exacerbated by the current global financial crisis.

Ethos, which currently is composed of 78 institutional investors, announced the news on Friday saying it was a move in the right direction.



« We are very satisfied with this first step... »

Dominique Biedermann, Ethos


"We are very satisfied with this first step... that these companies have accepted to put their remuneration reports to a vote," Ethos' managing director Dominique Biedermann told swissinfo.

"Now obviously each of these companies needs to communicate in detail its remuneration system to the shareholders so that they can decide if they can accept it."

He explained that it was important that Swiss companies had understood that rules of good governance had developed significantly over the past years.

"Shareholders have the right now to have their say on the problem issue of remuneration and we are very satisfied that these companies have accepted to do it spontaneously; it's proof that self-regulation can function even in the delicate area of pay."

Biedermann feels that such a consultative vote is a direct way for shareholders to have their say on the pay issue.

"Important signal"

"If a third of the shareholders are opposed to the remuneration strategy of the board of directors it is an important signal and companies will automatically take note and must change their policy."

Biedermann said its September resolution would still be maintained on the agenda of the annual meetings of Novartis (February 24) and ABB (May 5).

"We deeply regret that Novartis and ABB have refused to support our resolution, which calls for more rights for shareholders on the pay issue," he commented.

Ethos wants Switzerland's articles of incorporation to be changed to allow a separate vote on executive pay. It has also been seeking more details on the remuneration package of executives and board members, including more transparency of performance criteria.

swissinfo, Robert Brookes

© Copyright




This Forum program is open, free of charge, to anyone concerned with investor interests relating to shareholder advisory voting on executive compensation, referred to by activists as "Say on Pay." As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was supported by Sibson Consulting to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of performance leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.