Annual General Meetings 2025: The ever-recurring discussion on compensation and the reputation of members of the board of directors
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Zurich, 22nd April 2025 - The Swiss AGM season opened with the already usual public outcry over executive compensation. Total CEO pay increased by 11.2% year-over-year among the 100 largest SPI companies reporting so far, firing up the debates about fairness and accountability of executive compensation again. And while public outrage and political calls for salary caps made headlines, shareholders are sending a different signal: approval rates for compensation reports have increased by over 4 percentage points compared to 2024 so far. What explains this paradox—and how can companies navigate the growing divide between public sentiment and investor expectations? This newsletter takes a closer look at this perception mismatch and what it implies for companies’ boards.
- Public vs. Shareholder Perception: the public always compares total compensation amounts while shareholders focus on the pay for performance relation. Boards concentrate on the latter but need to better address the public sentiment by showing more sensitivity in their communication, otherwise they will face a (further) loss of credibility and negative reputational effects.
- The Approval Paradox: Rising pay levels and rising shareholder support are not mutually exclusive — if boards address transparency and performance alignment.
- Benchmarking Needs Rethinking: Compensation committees need to become more sensitive in defining peer groups and more transparent in rationalizing their choice of peer companies as the benchmarking outcome will ultimately have a reputational impact on their company as well as on them personally.
- Compensation Committees Must Step Up: Compensation Committees face substantial pressure to set more ambitious targets, justify special payments and improve overall disclosure. This is essential for the board’s credibility.
- Politics vs. Pragmatism: Introduction of pay caps risk unintended consequences, but a lack of engagement by boards and shareholders on compensation issues will call lawmakers into action following the public reactions.
- AGM outcomes so far (year to date): 12.5% of remuneration reports received less than 80% support (down from 29.6% in 2024) and one failed to receive majority support (n=28). Sustainability reports were approved with 96.3% on average, down from 99.3% a year ago.
- The average annual total compensation of CEOs is CHF 3.92m, up by 11.2% compared to a year ago. (reflecting amounts published to date) while the level of the 10 highest paying companies increased to CHF 12.03m, up by 9.6%.