After most of the companies listed on the Swiss Performance Index (SPI) held their annual general meetings (AGMs) for the 2023 fiscal year, proxy advisor Ethos has now released its annual analysis of voting results.

The study published on Thursday focuses particularly on the executive compensation agenda item, a topic that also interests the general public. This analysis covers the AGMs of 205 companies. In late June, the service provider Swipra Services had already presented its own evaluation of the 2024 AGM season.

First Votes on Sustainability Reports

Ethos also scrutinized the quality of sustainability reports. In 2024, companies listed on the SPI with at least 500 full-time employees and annual revenues exceeding 40 million Swiss francs (or total assets over 20 million francs) were, for the first time, required to produce a sustainability report under new provisions of the Swiss Code of Obligations (Article 964a ff.) and present it to shareholders. This affected 140 SPI companies, while three others voluntarily put the report to a vote.

Shareholder participation remained high, with almost 70 percent turnout, and in most cases, shareholders followed the board's recommendations. Approval rates even slightly increased from the previous year to over 95 percent. The most controversial agenda item was the compensation report, which was approved by an average of «only» 85 percent.

Limited but Measurable Influence

Unlike last year, when Credit Suisse was in focus, no financial sector companies were among the 10 most contentious AGMs this year. Average approval ratings ranged from 67 percent to 88 percent, and only 12 out of more than 4,000 proposals were rejected, reflecting overall high satisfaction with shareholder democracy.

Ethos, which estimates it represents 3 percent to 5 percent of votes at Swiss AGMs, has notable influence: proposals it supports are approved 97 percent of the time, while those it opposes see approval rates drop to 90 percent. This influence is even stronger for Swiss Market Index (SMI) heavyweights, with approval rates of 97 percent for Ethos-backed proposals compared to 89 percent for those it opposes.

UBS CEO Skews Compensation Figures

The financial sector stands out in the compensation chapter, with the average CEO salary at SMI companies increasing by 5 percent to 8 million Swiss francs. This rise is largely driven by Sergio Ermotti's appointment as CEO of UBS, with total compensation of 14.5 million francs, making him the highest-paid CEO in Switzerland. Meanwhile, CEOs of 184 SPI companies (excluding those with undisclosed salaries) earned an average of 2.3 million francs, reflecting a 3.8 percent increase.

In contrast, compensation for board chairs decreased slightly, with the average falling from CHF 2.2 million to CHF 2.1 million.

Most Compensation Reports Approved Smoothly

Ethos recommended approving less than half of the compensation reports. Where it opposed, the approval rate dropped from 88 percent to 82 percent. However, only five reports were actually rejected, as these votes are only advisory. Ethos considers this a «clear message» to boards to revise their compensation systems, despite the non-binding nature of these votes.

A key question regarding sustainability reports is whether the vote should be binding. 56 percent of the affected companies treated the vote as binding, aligning with Ethos' stance. However, over 40% viewed the vote—and its outcome—as merely advisory.

High Approval of Inadequate Sustainability Reporting

Ethos criticized many sustainability reports for failing to meet key requirements such as using internationally recognized standards, undergoing independent audits, and lacking transparency on greenhouse gas emissions and climate impact. As a result, Ethos recommended rejecting more than half of the sustainability reports from SPI companies, including those from SMI companies. Nevertheless, shareholders approved the agenda item with an average of 97 percent.

Ethos attributes this high approval rate to the lack of experience among investors in evaluating such reports and the high effort required for proper scrutiny.

More Companies, International Standards, ans External Audits

Ethos reminds readers that it has long demanded transparency from companies regarding their policies on environmental, social, and governance (ESG) matters, even before regulations were introduced. The Ethos Foundation, supported by over 250 pension funds and other institutions since its founding in 1997 (the operational arm, Ethos Service, was founded in 2000), has advocated for these issues.

Ethos now supports the planned tightening of the Swiss Code of Obligations, which will expand the number of companies required to produce sustainability reports, mandate adherence to an international standard, and require independent auditing. Ethos also calls for clarification that these votes should be binding, not advisory.

Numerous Anti-ESG Shareholder Proposals

Noteworthy developments at the international levelregarding climate-related issues have emerged. Ethos also provides voting recommendations for foreign companies, where there were 26 votes on specific climate plans or strategies in 2024 (Say on climate). Of these, Ethos evaluated 16  (with Holcim being the only Swiss company) and recommended approval for nine.

Shareholders can also submit ESG-related proposals. Ethos supported all 181 «klimafreundlichen» However, the contentious nature of ESG and sustainability is evident from the 46 so-called Anti-ESG proposals, which sought to prevent companies from adopting binding sustainability goals. Ethos swiftly rejected all of these proposals.