Shareholders call for new priorities for manager salaries

Checking the stock markets in Zurich's Bahnhofstrasse Keystone

Shareholders in Switzerland want a rethink on how managers are paid and demand that priorities regarding corporate governance, sustainability and corporate social responsibility (CSR) be redefined, a survey has found.

“Investors consider compensation systems not to be sufficiently aligned with social and environmental priorities and judge adjustments to bonus payments due to Covid-19 highly controversial,” according to a corporate governance studyExternal link by Zurich-based consultants SWIPRA, published on Tuesday.

Two-thirds of Swiss shareholders feel that environmental or social goals, such as equal pay, are currently given too little consideration in the assessment of managers’ salaries, it said. Nearly half of them also say that financial goals continue to be given too much weight in existing remuneration systems.

They were also asked whether the original targets for bonuses for 2020 should be kept, given the Covid-19 crisis. Some 44% of non-Swiss shareholders think the original targets should be maintained; only 17% of Swiss shareholders share this view.

Effects of Covid

The real effects of the coronavirus pandemic on corporate strategies have so far been limited, however.

The majority of the companies (60%) see little or no influence. That said, 51% of the companies believe that liquidity and capital management are becoming more important and 27% said the pandemic was strengthening the integration of CSR into corporate strategy.

SWIPRA Corporate Governance Survey

In collaboration with a team of researchers from the Institute of Banking and Finance at the University of Zurich, all companies listed on the Swiss Performance Index SPI as well as institutional investors from Switzerland and abroad were invited to participate in the eighth SWIPRA survey on corporate governance in Switzerland.

During the survey period (August/ September 2020), 73 Swiss companies listed on the SIX Swiss Exchange, representing about 77.2% of the market capitalisation of the SPI, and 76 institutional asset managers and asset owners from Switzerland and abroad participated. The participating investors, around 40% of them based abroad, represent at least 27.2% of the equity investments managed worldwide and hold substantial stakes in Swiss companies.

(SWIPRA)

On November 29, Swiss voters will decide on a proposal to impose due diligence rules on Swiss-based firms active abroad. It stands a good chance of passing, according to a recent poll.