SWITZERLAND - Executive remuneration in the Swiss financial sector increased year-on-year by more than 70% in 2009, according to the Swiss Foundation for Sustainable Development (Ethos).
Aggregate remuneration for board members and executive management at the 49 largest listed companies in Switzerland rose by 21% to CHF1.3bn (€952m) over the same period.
Executive pay increased by just 2% in other sectors, Ethos said.
On average, each member of executive management received CHF3m, while chairmen of the board received CHF1.9mn and other non-executive directors CHF300,000.
Ethos pointed out several companies run incentive plans whereby initial grants have substantial upward potential, but said there was no obligation to disclose the amounts released at the end of the performance period and that overall transparency remained insufficient.
The foundation said the variable part of executive management remuneration in Switzerland was very high, in particular in the financial sector, where it reaches 80% of total pay in large-cap companies.
The structure of the remuneration - such as fixed pay, annual bonuses and long-term incentives - has grown increasingly complex through the introduction of performance-based, long-term incentive plans, it said.
However, the lion's share of the amounts paid still does not depend on performance conditions tested over several years, which is not best practice, Ethos said.
The foundation said it aimed to continue to work with companies to get them to introduce an advisory vote of their remuneration report at the next proxy season.
It also plans to step-up dialogue regarding transparency and the structure of remuneration with the 100 most important listed companies on behalf of 48 pension funds participating in the Ethos Engagement Pool programme.
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