In a survey among finance experts, a fifth said that a salary of more than 3 million francs was unreasonable, while 40 percent say that the upper limit was 5 million francs.
By Andreas Jacobs, CEO of the Swiss Training Centre for Investment Professionals AZEK and the Swiss Financial Analysts Association SFAA
An appropriate recognition of sustainability is playing an important role, a broad-based survey by the Swiss Financial Analysts Association (SFAA) in cooperation with University of Bern showed.
Companies are publishing their annual reports and information about total compensation in spring. It often leads to controversial discussions about the absolute levels of pay, the split between variable and fixed components, and also about possible sanctions should targets agreed with the CEO not have been met.
Reality Check
About 150 financial specialists participated in the SFAA survey on the pay of CEO’s. The participants say that CEO’s should primarily be judged on the basis of the actual situation in key markets and the company’s future sustainability.
Market share, customer satisfaction, as well as the level of innovation, sustainability and staff satisfaction are measures of this. The financial performance of the company and operational excellence follow in second place.
Just How Sustainable?
Sustainability should also be a factor in determining the pay of CEOs. Three quarters of the surveyed say that the sustainability performance was important or very important. The difference between ecological (approval rate of 87 percent) and social aspects (92 percent) was marginal.
About a third want at least half of the variable component based on sustainable performance. Only 8 percent of the survey wish no link between the variable component and sustainability performance.
A Minimum Wage of 1 Million
One in five among the surveyed believes that a compensation of more than 3 million Swiss francs ($3.1 million) is unreasonable and 40 percent see an upper limit of 5 million francs. 82 percent of the surveyed say that a minimum of 1 million francs is opportune, while 53 percent say 2 million francs is the limit.
A majority is either satisfied or at least neutral about the compensation policy at SMI firms. Shareholders have several options to voice their discontent.
Nine out of ten among the surveyed financial experts say that they would either sell their shares or vote against the proposals tabled by the executive. 59 percent consider voicing their opinion at an annual general meeting and 63 percent would attempt to exchange the company’s management.
