The “klingler Governance- & Vergütungsreport” analyses and comments the board of directors and management structures of all listed companies listed in the Swiss Performance Index (SPI) as well as their compensation practices at board and management level based on the latest annual reports 2019. The fourth edition, which has just been published, examines almost 200 SPI companies and thus once again covers an extraordinarily broad spectrum of companies, which should make it highly informative.
The “klingler Governance- & Vergütungsreport 2019 / 2020” focuses in particular on the following topics:
- Composition of the Board of Directors of companies listed in the SPI
- Who has the best prospects of becoming CEO – who earns the most?
- The importance of the long-term incentive – without LTI no long-term prognosis?
- Disclosure trends
Composition of the Administrative Board
The demographic composition of Administrative Boards changes only slowly and for further information, please refer to the “klingler Governance- & Vergütungsreport 2018”, which has dealt with this topic in detail.
However, the proportion of women has been increasing year by year ever since and now stands at 16.5% compared to 15% in 2018. This means that listed companies in general are still a long way from the benchmark of 30% at Board of Director level being proposed in parliament.
Who has the best prospects of becoming CEO – who earns the most?
The average CEO of a listed Swiss company was previously head of a division of the same company, is 54 years old and has been in this role for 6 years. Longer terms of office, especially those longer than 10 years, are the exception: CEOs leave the top 30 companies after a relatively short time. Only 24% of the CEOs have previously been CEOs of other, comparable companies. And: From the age of 54, the probability of being appointed CEO decreases significantly.
The basic annual salary of a CEO is strongly influenced by the size of the company and increases proportionally with the number of employees in the company. Other factors are the industry and the market capitalization of the company in question. In addition, the gap between small and large companies continues to widen.
The importance of the Long-Term Incentive Incentive – without LTI no long-term prognosis?
The Long-Term Incentive (LTI) is designed to create a long-term incentive for management to develop the company in a sustainable and future-oriented manner. Thus, it makes sense for every company to use the LTI to provide optimum support and encouragement for the business challenges and priorities of the coming years. Especially in times of crisis!
This year, the newly published “klingler Governance- & Vergütungsreport 2019 / 2020” takes a fresh look on the long-term incentive design in light of current events. Especially in economically turbulent times like the ones we are currently experiencing, board members may be forced to rethink and adapt the previously common performance measurement and performance reward systems, including the use of Long-Term Incentives (LTI), in order to avoid unnecessay and additional endangering of the survival of companies in times of crisis.
Finally, this year’s report focuses on trends in disclosure practices, with a special emphasis on reporting of realized CEO pay. This is all the more important as this topic is likely to gain in importance over the next one to two years since some of the very large companies in Switzerland have recently started to publish this information, not least due to increasing pressure from shareholders and the public.
A final point, which has hardly been noticed in Switzerland, is the progressive disclosure practice in surrounding countries. The pressure on Swiss companies to expand their disclosure practice is therefore likely to increase again in the near future.
How to receive the report
If you wish to receive a PDF or a print copy of the “klingler Governance- & Vergütungsreport 2019 / 2020” in German and free of charge, kindly send us an e-mail to email@example.com.
Urs Klingler is happy to be at your disposal for any questions you might have as well as for further information.