April 15, 2013
First Swiss Company Fails Say-on-Pay
– Subodh Mishra, ISS Governance Exchange
Marking a first for the market, roughly 64 percent of shareholders in Zurich-based Julius Baer voted against management’s non-binding say-on pay resolution at an April 10 annual meeting, Reuters reported. The vote follows a March referendum that will usher in sweeping changes in investor oversight of executive remuneration for all Swiss companies, and reflects continued concerns over pay, particularly among financial services firms. (Credit Suisse will hold its meeting April 26, while UBS shareholders are slated to convene on May 2.)
Concerns over pay at Julius Baer, a private bank catering principally to individuals and families, were notable, touching on the lack of a ceiling on variable pay, equity awards vesting in under three years, and a lack of disclosure on remuneration arrangements such as severance pay. Responding to the vote, the group said in a statement it “will take the appropriate measures to work towards a positive vote at the next [annual meeting].”
Meanwhile, shareholders of multinational foods group Nestle meeting in Lausanne April 11 gave majority backing to management’s advisory pay vote, though exact figures were not disclosed. Addressing attendees on the implication of the pay reforms adopted in the March referendum, Nestle Chairman Peter Brabeck-Letmathe warned that “the political and regulatory environment for publicly listed companies is becoming more difficult in this country” though added the company wants to stay in Switzerland.
Separately, the Financial Times reported this week that the head of Austria’s second-largest bank by assets, Raiffeisen Bank International, told employees he would return Euro 2 million of his roughly Euro 5 million 2012 pay package, saying that executive remuneration could sometimes “turn out to be too high.” In an email to staff, Herbert Stepic said he was taking the action because the size of his payout was “neither in accord with my own self-conception nor with the Raiffeisen banking group’s foundation of values,” adding it was his contribution to cost-savings initiatives being undertaken by the bank.