Economiesuisse, the largest umbrella organisation representing the Swiss economy, decided to reinforce self regulation with regard to executive remuneration. To this effect, a consultation is launched on an annex to the Swiss Code of Best Practice in Corporate Governance published in 2002. At first glance, this is a welcome step in light of the growing controversy regarding executive remuneration. However, a closer look at the proposals shows that it is only a half measure.
Indeed, the proposal to establish a remuneration committee consisting only of independent members is commendable and the suppression of golden parachutes is a clear signal. However, concerning the competencies of the general meeting with regard to executive remuneration, the tone set is low-key. Two alternatives are proposed, one being the discussion of remuneration in the item involving approval of the annual report (confirming the unsatisfactory status quo) and the other giving the shareholders an advisory vote on the remuneration report. Nevertheless, the choice between the two options is left to each company.
For Ethos, such a stance is disappointing. The shareholders should have the inalienable right to express their opinion, be it only advisory, on the remuneration policy. By lack of will to confer the shareholders this right, Economiesuisse missed its target: convince that self regulation can come to ends with the contentious issue of executive remuneration.
