Remuneration reports rejected particularly frequently in Switzerland
Published: Thursday, Nov 28th 2024, 08:10
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Swiss companies have the highest rejection rate for remuneration reports in Europe. According to the governance consultancy Swipra, this is due to a remuneration level for managers that is perceived as high by shareholders, as well as a lack of transparency regarding remuneration.
On average, 18% of shareholders voted against the remuneration reports of the 100 largest Swiss companies, according to the 12th edition of the Swipra study on governance and sustainability published on Thursday. According to the study, the low level of approval is due to the fact that 76% of shareholders consider the remuneration level of executives in Switzerland to be excessive.
Insufficient transparency
In addition, 43 percent of shareholders felt that the transparency of performance-related remuneration was inadequate. There is a lack of clear performance indicators and sufficient disclosure of how remuneration is linked to corporate objectives. 52% of shareholders also consider the selection of peer groups to justify remuneration to be inappropriate - these are often chosen strategically, which leads to excessive salary levels.
Management remuneration can become a problem if it is not transparent or develops differently to employee remuneration, Swipra states in the study. Ultimately, the reputation of the company and the board of directors could also suffer. "These reputational considerations are still given far too little consideration in the remuneration debate," says study author and Swipra partner Christoph Wenk.
Resource-intensive sustainability reports
The introduction of the vote on the sustainability report has had a significant impact on companies' reporting practices, the study continues. 45% of companies stated that this was the most resource-intensive AGM agenda item in 2024. At the same time, the quality of reporting has improved significantly, according to Swipra.
Sustainability reports were accepted by an average of 97% of shareholders at general meetings. However, according to the study, this was mainly due to the fact that almost half of shareholders were unclear about what they were actually voting on: Whether it was an assessment regarding the companies' ambitions or its progress in the past, for example.
However, Swipra is convinced that as shareholders gain more experience in interpreting such reports, they will be able to make a more differentiated assessment. Companies should therefore not rely on approval rates remaining high in the future, according to the consultancy.
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