Shareholder rights Remuneration reports rejected particularly frequently in Switzerland

Swiss companies have the highest rejection rate for remuneration reports in Europe. This is due to the fact that shareholders consider the level of remuneration paid to managers to be high, as well as insufficient 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 level of executive remuneration in Switzerland to be excessive.

Insufficient transparency

In addition, 43 percent of shareholders felt that the transparency of performance-related remuneration was inadequate. There was 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 comprehensible or develops differently to the remuneration of employees, 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.

SDA