SWITZERLAND - Swiss company law, the Swiss code of best practice and the Corporate Governance Directive of the SIX Swiss Exchange should be revised urgently, according to the Swiss Foundation for Sustainable Development Ethos.

Despite the increase in the number of companies that have established a say-on-pay policy, many still refuse to do so.

This shows that self-regulation in the field of executive remuneration does not function adequately, according to Ethos, with most companies arguing that they do not want to change their practice as long as this is not imposed by law.

Dominique Biedermann, executive director at Ethos, said: "Our laws, codes and directives are no longer adapted to the current situation with regard to executive remuneration.

"It is therefore urgent to proceed with the revision of Swiss company law and the Swiss Code of best practice, as well as the Directive on Corporate Governance of the SIX Swiss Exchange."

This came in light of the fact that total remuneration paid to the boards and the executive management of Swiss listed companies in the financial sector rose by 8% in 2010, while it remained stable in other sectors, and is twice as high as the one paid in other sectors.

Last year, members of the executive management of the 48 largest Swiss listed companies received on average CHF3.1m (€2.6m), according to Ethos's 2010 executive remuneration survey of the 48 largest Swiss listed companies.

The chairmen of the board received CHF2.4m, while other members received CHF300,000. The aggregate remuneration of the boards and executive management of the companies included in the survey was CHF1.3bn, a rise of 2% on 2009.

The evolution of total remuneration during the past six years shows a link between remuneration and performance in the financial sector, but not in the other sectors.

Members of executive management in financial companies received an average remuneration of CHF4.7m compared with CHF2.5m in the other sectors.

A key feature of the 2010 executive remuneration is the general increase of base salaries in companies operating in the financial sector, which remained stable in other sectors.

On average, base salaries rose by 15%, reaching CHF900,000 per person.

The increase for chief executives amounted to 66% on average. Generally, the variable part of remuneration largely exceeds 50% of total remuneration.

The highest variable remuneration - on average, 78% of the total - was observed in the financial companies included in the SMI index.

The survey also shows that 56% of the companies under review, a total of 27 companies, proposed an advisory vote on their remuneration report at their 2011 annual general meeting, up from 38% in 2010.

The rate of opposition rose to more than 16% in 2011, up from 11% the previous year. And for the first time in Switzerland, a remuneration report was not approved, with the remuneration report of Weatherford International receiving only 44% approval.

Overall, remuneration became the most contested issue at the AGMs of Swiss companies in 2011.

The survey can be found here.