CEO's still don't get it!

Interesting snippet about the views of a CEO with a leading bank. "Let's have a review about how the economy is compensated". Nice try Mr. Ermotti, but where shall we begin? This would mean to start a debate about our whole economic system but appears to me to be a diversion from the obvious problem: Why do CEO's get paid so much more than ordinary mortals, even those working in the same company? Tucker might well include other industries in his argument, but for one reason or another he focused on bankers.
UBS' Sergio Ermotti tries to divert attention from banker's pay

Commodity Traders - the next shoe to drop?

While the focus was on the level of debt that can or cannot be sustained by Glencore one should also ask what amount of taxes are paid by the Commodity trading houses - most of them based in tax-friendly Switzerland. A lot of criticism was recently directed at the tax avoidance schemes employed by Amazon and Starbucks, to name just a few prominent names. But who really knows where the trading houses book their profits?

Board Members and Conflicts of Interest

News that Peter Brabeck, Chairman of Nestle and member of the board of Credit Suisse has borrowed a total of Sfr 14 million from the bank that paid him a total of Sfr 500,000 last year highlights the potential for conflicts of interests when a board member has senior positions in companies that are doing business together. In the days of the 'Old Boy Network' it was easy and convenient to invite people to sit on one's board as one knew them already and could be confident that they would see their role more as friendly advisor rather than as objective controller. Pro-Governance repeatedly warns that the practice of board members being selected by exactly the people they are supposed to supervise is deeply incestuous. When a board member is connected to a financial institution and a company that is in business contact (as client or investor) the possibilities for abuse multiply.
(25/03/2011)

'Rip Off' referendum in Switzerland shows danger of inaction

The long-delayed Swiss referendum about limiting the pay of senior managers in listed companies demonstrates the danger that politicians and politics take over the debate about senior executive compensation. The public's fiduciaries in the fund management business in most countries would be well advised to heed this warning and speed up discussions about how to effectively curb excessive pay that a small group of executives awards to its members year in year out with not change in trend in sight despite growing public opposition and anger.
(26/02/2011) 

Executive Pay - consultative vote not enough

There is disappointment among corporate governance activists in Switzerland who hoped that (purely 'consultative') shareholder votes about (top) executive pay would lead managements to moderate their greed. Novartis Chairman and CEO shows no shame when accepting a 'compensation' package calculated to be worth Sfr 25.3 million in 2010. Apart from the fact that combining the two top offices is already a dubious corporate practice the fact that he gets 'compensated' for accepting a no-compete clause is another slap in the face for shareholders - but also for other employees who generally do not get separate compensation if they have to submit to a no-compete clause in their employment. One should think that someone who certainly has a high degree of intelligence like Vasella would be perfectly able to make a decision whether or not to accept such a clause when accepting his basic pay package. That he gets substantial pay for 'retirement benefits' that are not necessarily aligned with the pension benefits of ordinary  employees is another contravention to fair play. Summing up we can say that these 'consultative' votes are a waste of time. We call for binding votes on top executive compensation and demand that all perks (health, pension, share options etc) are made available to all employees on a pro-rata basis related to basic salary. Even better, if top management is prevented from receiving discretionary bonus awards the whole discussion about annual votes on compensation would become superfluous.
(23/02/2011) 

Sulzer - another victim of poor takeover protection

The fact that a Russian 'Oligarch' can exercise control over a century-old company like the Swiss Engineering firm Sulzer is an indictment of the system of corporate governance that is allowed by 'free-for-all' takeover rules. While this system may just be acceptable for football clubs (and a simple rule change limiting the votes for each owner to a modest level would be welcome there as well) it is questionable whether the interests of good management and wider stakeholders (employees present and past, customers, the community the company is based in) is really served well by giving individual shareholders too much influence just on the basis of a minority stake in the company (even if it is 31%). Minority governments are bad enough (The UK suffers from this for more than 30 years now) but there is no reason to replicate this in listed companies. If Mr. Vekselberg, for example, thinks he has a superior business plan for Sulzer he could either (1) try to convince the other shareholders and/or management about the quality of his ideas or (2) try to gain control about the majority of the share capital in a supervised auction process that avoids premature squeezing out of Shareholders that see long-term growth potential in the shares and do not want to be deprived of it due to weak takeover controls.