Swiss pension funds obliged to vote at AGMs under final version of Minder

But they may abstain in interest of beneficiaries

Swiss pension funds will now be obliged to vote at company annual meetings according to the final version of the so-called Minder initiative against excessive executive pay.

It means they have failed in their attempt to be exempted from having to vote.

According to the final Minder law, unveiled on Wednesday by the Swiss justice ministry and which takes effect on January 1 2014, the funds will have to vote at listed Swiss firms.

Yet the law permits them to abstain if it’s “in the interests of their beneficiaries.” The law goes on to say that the schemes’ management will define exactly what those interests are.

The measure further specifies the issues to be voted on – namely board elections, pay for executives and board members and changes to company statutes.

To the delight of Swiss pension fund lobby ASIP, which had opposed the Minder initiative prior to its adoption during a March 3 referendum, the government’s original draft law exempted the schemes from voting altogether if their managers felt it conflicted with beneficiaries’ interests.

That waiver defied the spirit of the highly popular initiative, which held that pension funds, as guardians of social capital, must take a stand on executive pay by voting at AGMs.The Minder camp was outraged, accusing the justice ministry of striking a “behind-the-scenes deal” with ASIP to exempt pension funds from the voting requirement. “Close examination of the draft law reveals that the passage concerning the requirement was just copied from a position paper by ASIP and economiesuisse (Switzerland’s business lobby),” said fellow proponent Claudio Kuster.

While the ministry denied any backroom deal, it appears that it has realised a full exemption would have subverted Minder, which was supported by 70% of voters.

In a statement, ASIP regretted the removal of the full exemption but welcomed being able to abstain.

The Minder law also respects the initiative’s original proviso that funds must inform their beneficiaries about how they voted at AGMs. This reporting can, however, take the form of a general summary, which ASIP greeted with relief.

Another major change to the initiative is the government’s decision to preserve golden handshakes for executives. The original ban on “golden parachutes,” or generous severance pay for executives, has also been upheld. The government has given the country’s listed companies and their shareholders up to one year to prepare for the new regime. The first binding shareholder votes on executive pay must, therefore, be taken during the 2015 AGM season at the latest.