Switzerland maintains a distinctive corporate governance framework that blends Anglo-American and Continental European elements. Despite not being subject to the EU’s Shareholder Rights Directive II (SRD II), many Swiss companies align with international best practices. This proactive approach has contributed to strong institutional investor support.
Influential stakeholders such as the Ethos Foundation continue to shape governance standards. They remain vocal on executive pay, board elections, and sustainability, recently using new voting powers under Article 964 of the Swiss Code of Obligations to challenge sustainability disclosures and demand audit-backed reporting.
We will be looking at the latest Corporate Governance trends and themes, standout events, and outline what it means for the market ahead.
AGM Voting Trends: SMI & SMI Mid (1 Jan – 6 Jun 2025)
Voting data from SMI and SMI Mid companies reveals consistently high shareholder support. Remuneration items, typically contentious, garnered notable approval—suggesting broad investor satisfaction with pay structures.
Board- and reporting-related proposals also received strong support, with isolated exceptions for individual director re-elections.
Support for environmental and social matters, mainly sustainability reporting, showed greater variability, reflecting investors’ growing attention to disclosure quality.
Corporate structure proposals remained broadly uncontroversial.
Case Study - Novartis: Scrutiny on Executive Pay
At Novartis, Ethos opposed a proposed CHF 95 million executive pay cap, citing concerns over variable compensation and CEO pay escalation following a CHF 19.2 million payout in 2024.
Although the proposal passed, it underscored rising investor sensitivity to executive pay alignment with long-term performance.
Case Study - Swatch Group: Activism & Governance Risks
Swatch Group’s AGM became a high-profile case for governance concerns. Activist investor Steven Wood sought a board seat, challenging the Hayek family’s influence. Despite backing from ISS and Glass Lewis, his bid was defeated by 79.2% of votes—due largely to the Hayek family’s 44% voting stake.
Proxy advisors also opposed several board re-elections due to independence concerns. Director re-election support averaged just 81.4%, with Nayla Hayek receiving the lowest backing. Discharge proposals for board and management passed by only 55.7%.
The Swatch case highlights persistent governance challenges: concentrated ownership, limited independence, and minority shareholder disenfranchisement—exacerbated by weak 2024 financial performance, with profits down 75% and shares near a 16-year low.
Conclusion
Switzerland’s governance model remains strong overall, marked by high AGM support and alignment with international expectations.
However, the events at Novartis and Swatch underscore the fragility of investor trust when compensation or board structure appears misaligned. As sustainability and shareholder rights gain traction, even legacy firms may face greater scrutiny. These developments suggest a maturing Swiss market.
