Ordinance against excessive remuneration in listed stock corporations

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The ordinance against excessive remuneration in listed stock corporations , abbreviated VegüV , was drawn up by the Swiss Federal Council in March 2013 as a result of the Swiss people's acceptance of the Swiss people's initiative “against rip-off” and came into force on January 1, 2014.

content

The main changes for listed Swiss stock corporations in simplified form are:

  • The members of the Board of Directors (BoD) must be re-elected annually by the General Assembly (GV) of the shareholders. A board member is then elected as president of the board for only one year.
  • The BoD must prepare a remuneration report at the AGM. The mandatory information is prescribed in detail.
  • A remuneration committee is then elected by the AGM from the elected members of the BoD.
  • The AGM elects an independent proxy until the next AGM. In accordance with the guidelines set out in the company's articles of association, the latter follows the instructions of the shareholders at the subsequent AGM.
  • Representation of organs and custodians is no longer permitted.
  • Many details are to be regulated in the company's statutes, including:
    • the maximum number of additional activities of members of the BoD and the executive board at other companies
    • The duration and notice period of contracts for the remuneration of the board of directors and the management board may not exceed one year
    • The principles of performance-based remuneration and the allocation of equity securities, conversion and option rights must be defined
  • Advance payments and severance payments for GL and VR are not permitted.
  • The AGM votes in a binding manner on the remuneration received by the Board of Directors, the Executive Board and the Advisory Board .
  • Swiss pension institutions ( pension funds ) must exercise the voting rights for the shares they hold on announced motions on certain important issues at the AGM.

The above list is formulated in a simplified manner and is not complete. The text of the regulation is binding.

Swatch wristwatch on the occasion of the AGM on May 28, 2015. The regulation text is printed on the mini roll over a length of approx. 180 cm.

implementation

There is a transition period in which the companies must comply with the new directives for the 2015 financial year at the 2015 GM at the latest.

Controversies have already arisen over the interpretation of this regulation. Law firms have acted on behalf of stock corporations in order to interpret the scope of the new regulation in the interests of the board of directors and the management board:

  • For example, payments upon or after joining are no longer granted as remuneration in advance, but rather under the flexible term financial disadvantages upon joining , including services defined as compensation for valuable claims against previous employers , e.g. B. for lost share-based rights (share options, etc.).
  • Instead of severance payments, competition clauses are also included in the employment contracts of management board members in order to be able to pay remuneration in the amount of several annual salaries for three years when leaving the company. Subsequent consulting contracts are also still possible.
  • The authorization of shareholders to the proxy without specific instructions ( blank powers of attorney ) with regard to the agenda at the AGM should generally be interpreted as approval of the motions of the BoD and not as abstention.
  • The ASIP , the Swiss Association of Pension Funds, for some of its members of the vocal duty attempted to evade. Resolutions on investments in collective investment vehicles such as funds are to be exempted from voting.

As a counterbalance to the action of the stock corporations, organizations look after the interests of the shareholders. For this purpose, business reports and proposals by the BoD for the general meeting of companies are analyzed. The Ethos Foundation pays special attention to compliance with ethical principles and sustainability. zCapital and zRating primarily examine compliance with corporate governance rules based on 60 criteria. zRating publishes its results as a ranking of currently 150 companies. Also Actares (shareholders for sustainable economies) makes similar recommendations for shareholders. The organization Swipra (Swiss Proxy Advisor) is geared towards advising pension funds on voting rights and works together with the Institute for Banking and Finance at the University of Zurich .

The proportionality of manager remuneration aimed at by the popular initiative - in relation to the respective company and its business success - was not achieved in most cases according to the 2015 inventory.

In May 2015, the Handelszeitung set the remuneration of the management of all companies in the Swiss Market Index in relation to the price / earnings ratio and the market capitalization of the companies. The impact of the rip-off initiative is assessed as sobering for the 2014 financial year.

The new rules and adjustments required by this ordinance were only reluctantly adopted by several Swiss companies. This is characterized by the "VegüV" wristwatch specially created for the Swatch Group's shareholders ' meeting, which illustrates the complexity of the new rules (see picture).

Wages were expected to stagnate or fall, but the opposite is true. The mean annual salary of a CEO, for example, is currently 1,200,000 francs.

Transfer to ordinary law

On November 28, 2014, the Swiss Federal Council published a detailed template for the implementation of the rip-off initiative at legal level for consultation. The main specifications or deviations from the currently valid ordinance and practice in the case of changes to the articles of association of companies that have already been carried out are:

a) The remuneration of members of the executive board must be shown individually (not, as previously, only high earners individually and the total amount of all members).

b) The shareholders should only be able to vote on the variable remuneration of the management and the board of directors after the relevant business results are available (no advance voting, budget coordination or similar without knowledge of the actual results of a financial year).

c) The share of the fixed remuneration in the total remuneration should be specified as a minimum value in the articles of association, or the variable remuneration should be limited to a maximum proportion of the total remuneration.

d) Start-up payments to new employees in the top management are only allowed if the financial disadvantage can be clearly demonstrated by the loss of claims with the previous employer.

e) The abuse of compensation for non-competition as disguised severance payments should be prevented. A non-competition clause should only be agreed for a maximum of one year and only be compensated according to customary market practice, and it must be justified on a business basis.

Following the consultation process on the November 2014 submission, the government made political decisions on December 4, 2015 on the basis of weighty objections. The stricter rules a), b) and c) listed above should no longer be proposed to parliament as a reform of company law. Point e) should also be modified. Instead of a competition regulation limited to one year, a limitation of the amount of remuneration for a non-competition clause is to be introduced.

In November 2016, the Swiss Federal Council published the dispatch on company law reform. This includes modified rules for the remuneration of listed stock corporations. Severance payments in accordance with point e) may not exceed the average annual remuneration for the previous three years.

Web links

Individual evidence

  1. a b Full text of the regulation see web link
  2. a b c David Oser, Andreas Müller (ed.): Praxiskommentar VegüV. Schulthess, Zurich 2014, ISBN 978-3-7255-6922-9
  3. Alexander Nikitin: Debate about new rules of the game through the Minder Initiative. In: Neue Zürcher Zeitung, No. 38, February 15, 2014, p. 38
  4. Homework of the pension funds,  ( page no longer available , search in web archivesInfo: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. Neue Zürcher Zeitung, May 24, 2014, p. 29, accessed on May 27, 2014@1@ 2Template: Dead Link / epaper.nzz.ch  
  5. Good to very good - Z-Rating evaluates control structures at Swiss companies. In: Neue Zürcher Zeitung, No. 118, May 23, 2014, p. 25
  6. site of Actares
  7. Web site Swipra
  8. More initiative - manager wages: The sense of the rip-off initiative is hardly respected. In: Handelszeitung, No. 9, February 26, 2015, p. 4
  9. Little has changed in terms of top salaries. Interview with Dominique Biedermann in: NZZ am Sonntag, March 15, 2015, p. 30
  10. Georg Pröbstel: rip- offs in the SMI - these companies have the most expensive management. Handelszeitung online, May 15, 2015
  11. Nothing except expenses - rip-off initiative misses its goal In: srf.ch , March 3, 2018, accessed on March 3, 2018.
  12. ^ [1] Draft for the revision of company law, November 28, 2014
  13. Hansueli Schöchli: Federal Council overtakes Minder. In: Neue Zürcher Zeitung, No. 281, December 3, 2014, p. 23
  14. Peter J. Wild: Problematic advance coordination. In: Neue Zürcher Zeitung, No. 285, December 8, 2014, p. 14
  15. Brigitta Moser-Harder: The revision of stock corporation law offers a lot of new things. In: Neue Zürcher Zeitung, No. 29, February 5, 2015, p. 20
  16. Hansueli Schöchli: Federal Council wants a ban on pre-voting on bonuses. In: Neue Zürcher Zeitung, No. 278, November 29, 2014, p. 27
  17. Hansueli Schöchli: Federal Council insists on a quota for women. In: Neue Zürcher Zeitung, December 5, 2015, p. 31
  18. Hansueli Schöchli: Federal Council adheres to the controversial quota for women. In: Neue Zürcher Zeitung, November 24, 2016, p. 17