On 3 March 2013, a clear majority of the Swiss people and cantons voted in favour of the popular initiative "Against Fat-Cat Salaries". The Federal Council has a maximum of one year from the date of the referendum in which to enact the new constitutional provision in an ordinance. The preliminary draft of the ordinance has been drawn up by the Federal Office of Justice, with certain passages revised following discussions with experts in labour, company and criminal law. It closely follows the wording of the constitution, is practice-based, and also aligned with applicable law on companies limited by shares. The preliminary draft contains provisions on listed companies that are limited by shares, as well as on pension institutions, in addition to criminal provisions. No changes will be made directly to the Swiss Code of Obligations, the Federal Occupational Pensions Act, or the Swiss Criminal Code.
General meeting approves remuneration
According to the preliminary draft of the Ordinance, the general meeting of shareholders is to be granted non-transferable powers to elect the chair and members of the board of directors, the remuneration committee and the independent proxy, on an annual basis. The board of directors determines the remuneration to be paid to members of the board of directors, the executive board and the board of advisors. In addition, the general meeting must approve all remuneration paid to the board of directors, the executive board and the board of advisors. Under certain circumstances, the articles of association may provide for an alternative approval mechanism, although this may not impinge on the annual role of the general meeting. The board of directors is to draw up a remuneration report for the general meeting which sets out the remuneration paid to its members and members of the executive board and the board of advisors.
Governing officers may not be given severance or similar payments, advance payments, or bonuses for the takeover or sale of companies or parts thereof. Performance-related pay which does not correspond to the principles laid down in the articles of association is also prohibited.
Under the new ordinance, shareholders may no longer be represented in voting by a governing officer of the company or by a custodian bank. The only permitted form of institutional voting rights representation is thus the independent proxy. Companies must ensure that their shareholders are able to issue powers of attorney and instructions to the independent proxy by electronic means in addition to paper forms.
In the interests of insureds
Pension institutions must exercise the voting rights attached to the listed shares they hold in the interests of their insureds. They may also abstain from voting or entirely refuse to participate in a vote if this best serves the interests of their insured members. At least once a year, they must produce a report for their insureds, accounting for how they have fulfilled their voting obligations.
In the future, violations of the mandatory provisions of the Ordinance may be prosecuted under criminal law, with a maximum sentence of three years in prison.
Hearings with political parties, business associations and other interested organisations continue until 28 July 2013. There will then be consultations with the Legal Affairs Committees of the Council of States and National Council. This schedule will allow the Federal Council to adopt the Ordinance at the end of November 2013 and enact it with effect from 1 January 2014. The transitional provisions provide for the new legislation to be applied in stages up to the general meetings of 2015 (see enclosure).
Last modification 14.06.2013