Switzerland's biggest firms have been accused of keeping shareholders in the dark about executive pay packages that soared 15.8 per cent on average last year.
Companies do not reveal the full details of complicated shares and options packages while bosses have too much say in pay awards, according to a report from sustainable investment fund Ethos.
The annual survey of the 100 largest Swiss firms found that executives took home an average SFr2.3 million ($2.06 million) in their pay packets while board members received SFr223,000 – a rise of 5.6 per cent from 2005.
Ethos is particularly concerned that the value of performance-related bonus packages, usually in the form of shares or options (shares that can be cashed in at a later date for a fixed price), are often missing from company reports.
For example, Novartis chief executive and chairman, Daniel Vasella, received SFr3 million in cash last year, but he was also awarded shares worth SFr41 million.
Shareholders should be told the true value of such packages and the performance criteria attached to them, argued Ethos director Dominique Biedermann.
"Shareholders want to know the relationship between performance and pay. If you only know the basic pay then you cannot work out how important the variable [performance related] part is in the whole compensation package," he told swissinfo.
The recurring issue of executive pay comes against the backdrop this year of several financial institutions suffering heavy losses from the US subprime mortgage crisis.
Some UBS shareholders have called for chairman Marcel Ospel's bonus to be cut after the bank was forced to write off SFr4.2 billion in bad subprime-related debts this year.
"There is a clear expectation that pay should be reduced [in badly performing companies]. It is difficult to judge how far that should go but it is very clear that a big part of the variable compensation should be forfeit," Biedermann told swissinfo.
Ethos believes that recent and forthcoming changes to stock exchange rules and the self-regulatory Swiss code for corporate governance on the subject of transparency are a step in the right direction.
But the organisation still called for tougher regulations to give shareholders more of a say in executive compensation. Compared to other countries, Switzerland has a mixed record.
"When you make the comparison to countries like Britain, Sweden and the Netherlands where shareholders can vote on pay politics then Switzerland is not very transparent," he said.
"But when you compare Switzerland to Germany, Italy or Spain then we are not so bad at pay transparency."
swissinfo, Matthew Allen in Zurich
The Swiss Foundation for Sustainable Development (Ethos) was created in 1977 by two Geneva-based pension funds and now has 75 institutional investors.
Its aim is to promote sustainable development principles and corporate governance best practice in investment activities.
It advises investment funds and asset management mandates worth SFr2.5 billion.
Ethos also carries out analyses of shareholder meetings and has a programme that promotes dialogue with companies.
A report by trade union umbrella group Travail Suisse issued in June this year found that the salary gap between bosses and workers is increasing.
Top managers pocketed wage hikes 80 times higher than those of ordinary workers between 2003 and 2006, the report concluded.
Switzerland's largest union, Unia, said the margin grew 12.6% in 2006 alone.
Technology company OC Oerlikon was singled out as executive pay awards soared 109% last year.