Member Sign In | Not a member? Register Now
Ethos’ six-month campaign: a new tactic in European say-on-pay
Swiss investors adopt US-style publicity strategy to shame companies into action.
Dominique Biedermann, Ethos
The announcement by eight Swiss pension funds and Ethos, the Geneva-based foundation which looks after CHF2.3bn (€1.4bn) in assets run on a socially responsible basis on behalf of 80 Swiss pension funds, that they are going international with the creation of an institutional support group for their say-on-pay campaign at five of Switzerland’s largest companies, ABB, Credit Suisse Group, Nestlé, Novartis and UBS, heralds the start of an aggressive movement by European investors. That movement has, in part, been galvanised into action by the credit crisis following worldwide condemnation by politicians of excessive, short-term driven executive pay as being at the heart of the financial markets meltdown. Dominique Biedermann, executive director at Geneva-based Ethos, explains that it is part of a six-month campaign, which he likens to the more overt tactics on say-on-pay by US investors where a maximum amount of public and media pressure is used to prod companies into action. Biedermann says: “We think this is a small revolution and quite a unique approach in continental Europe. The law in Switzerland gives us no rights to a say-on-pay, so we have to stand up as shareholders and make a noise.”
In September, Ethos set out its five resolutions in one dramatic announcement, backed with a report that found that pay amongst certain Swiss executives was “inappropriate” and “excessive” in light of company performance. Ethos said: “Remuneration policies often do not follow international best practice guidelines. In most cases, variable pay is not determined by adequate performance criteria and recent events have demonstrated that a bad remuneration structure can have very negative consequences on the company’s strategy.” Biedermann says: “The fact that we announced this six months in advance of the AGMs is very important. Firstly, it means we can block a certain amount of shares between us to get the minimum requirement to table a resolution, which can vary from company to company. It allows us to mobilise and each block just a part of our shares. Secondly, the six-month lead gives the companies time to convene their various committees and, ideally, come up with an appropriate response that would mean the resolution could be pulled. If we come with a resolution just 45 days in advance of the AGM, as required by law, it can make it very difficult for the company to respond.”
Page 1 of 2 | Next »