Swiss pension fund association seeks exceptions to Minder voting requirement

Asset owner group in plea to government in wake of historic vote

Swiss pension fund association ASIP has urged the government to allow exceptions to a rule enshrined in the Minder initiative which obliges them to always vote on executive pay and inform on how they voted.
The association argues that the exceptions are necessary to avoid raising costs, especially on smaller schemes that may have to hire staff to deal with the requirement, or alternatively turn to proxy voting advisory firms.
The Minder initiative, an attempt to rein-in excessive executive pay at listed Swiss firms, was adopted following a national referendum on March 3.
The government in Berne is in the process of enacting it and a draft bill is expected next month. In the run-up to the referendum, ASIP staunchly opposed the Minder initiative. Now that it will become law, the lobby is seeking maximum flexibility for its members.
According to ASIP, an exception to the voting rule should be made in the case where a scheme is invested in a stock fund.
“It ought to be possible for the scheme to not take a position if it agrees with the voting position of the fund’s management,” said Hanspeter Konrad, ASIP’s managing director. According to federal statistics, Swiss schemes have CHF58bn (€48bn) allocated to stocks. Slightly less than half (CHF25bn) of these allocations are to funds.

ASIP also sees merit in an exception suggested by Switzerland’s Gewerbeverband, an association for small- to midsize firms whose employees are insured in part by Swiss pension schemes.

The Gewerbeverband advocates exempting pension schemes from the Minder voting requirement if they have less than a 0.1% shareholding of the company.Said Konrad: “We are open to suggestions that seek to ensure a practical implementation of the Minder initiative. We in any case would prefer that Minder not be over-interpreted and that it be left up to the schemes to decide when they vote.”
Yet Claudio Kuster, who helped Swiss MP Thomas Minder get his initiative adopted, rejected ASIP’s demand for a voting exemption for schemes invested in stock funds. “That simply contradicts the point of the initiative,” he told the Zurich daily NZZ. Regarding the Gewerbeverband’s suggestion, Kuster said he could support it if the threshold were lowered from 0.1%.
ASIP also criticises Minder for singling out Swiss pension schemes in terms of reporting: “It’s just unfair that the initiative mentions only pension funds when it comes to the reporting on how they voted,” said ASIP president Christoph Ryter, who spoke at an event organised by advisory firm Inrate in Zurich recently. “There are other investors like insurers and sovereign wealth funds that have significant holdings in listed Swiss firms and they don’t face a similar requirement.” Swiss schemes were singled out by Minder because they hold social capital – that is the pensions of Swiss citizens. The idea is that the Swiss, through the schemes, can exert pressure on listed firms to better govern themselves.
Ryter acknowledged that this was a key aim of the initiative. But he said he was sceptical that the schemes could make a huge difference: “The stock holdings of our members is equivalent to about 6% of the free float. That means our voting power is very limited,” he told Responsible Investor.