Summary
Remuneration for Board members is complex, with several issues to consider. It is influenced by a number of different factors, including time spent on Board activities, the responsibility and risk involved in a Board mandate, the requirements of Board members (specialist expertise, experience and networks), and market comparability. Both internal and external stakeholders are also increasingly concerned with the level and appropriateness of Board remuneration, often triggering debate both within companies and within the wider public arena. For all these reasons, Boards need to look more closely at their company’s remuneration structures from time to time and to reflect on them.
About the survey
swissVR Monitor is based on a survey carried out jointly by swissVR in collaboration with Deloitte and the Lucerne University of Applied Sciences and Arts. The aim of this bi-yearly survey is to gauge Board members’ attitudes to the outlook for the economy and business as well as corporate governance issues. swissVR Monitor also aims to share with the wider public the ways in which Board members perceive their role and the current economic situation. Each edition also explores a special focus topic and conducts interviews with experts. A total of 453 Board members took part in the current edition of swissVR Monitor, providing a good overview of the views and challenges facing board members in Switzerland.
Key findings
Outlook
Board members remain downbeat in their rating of the economic, sector and business outlook over the next 12 months. More respondents rate the prospects for the Swiss economy as negative than positive. On average, however, their rating of the outlook for their sector and their company is largely unchanged. Factors causing uncertainty include ongoing geopolitical risks (especially the war in Ukraine), continuing high inflation and the tightening of monetary policy by central banks.
Time spent the main criterion for determining Board remuneration
Time spent on Board activities is the most frequently cited criterion for determining remuneration. This is followed by the responsibility and risk involved and the demands on Board members (experience, specialist expertise and networks). Other important criteria include fairness of remuneration and distribution within the Board, the size and financial strength of the company, and market comparability.
Wide diversity of Board remuneration
The payment received by Board members varies widely, from less than CHF 5,000 to more than CHF 100,000. There is a clear correlation between company size and Board remuneration: the larger the company, the higher the payment its Board members receive. An individual’s role on the Board also influences their remuneration. There has been a modest uptick in levels of remuneration since swissVR Monitor II/2018, when this topic was last surveyed.
Flat-rate payments the most common remuneration model
Board members report many different remuneration models, but flat-rate payments are the most common. Other models, such as a flat-rate payment plus a payment per meeting attended or a flat-rate payment plus a variable component based on company profits, are rare. Around two Board members in five receive an expenses payment alongside their remuneration; this is usually based on a flat-rate sum, but in some cases, Board members submit individual claims.
Board members actively involved in the strategy process
Survey responses indicate that almost all Board members play an active part in determining their company’s corporate strategy. Around nine-tenths of all Board members say that they have enough time to discuss strategic issues and that individual Board members feel they are adept at tackling strategic issues. Board members also feel that management reporting to the Board is appropriate and meaningful. Very few Board members feel they are not given full and timely information.
Formulating new corporate strategy a focus for Board members
Formulating a new corporate strategy was the most important issue facing Board members over the past 12 months, followed by responding to market developments/behaviour of competitors and risk management. Digitalisation/robotics/automation and improving efficiency/optimising internal processes are cited by fewer respondents than in earlier surveys. Talent management, including recruitment and retention, is seen as the most important issue facing Boards over the next 12 months.
Top 10 issues facing boards of directors
Board members cite formulating a new corporate strategy as one of the most important issues their Board has had to tackle over the last 12 months (36% of responses). This was also the most frequently cited issue in swissVR Monitor II/2022. However, Board members are less likely to cite it as one of the most important issues they will have to tackle over the next 12 months, ranking it ninth with 19% of responses.
Rankings
| 2023 | 2022 | Issues | |
|---|---|---|---|
| 1 | 1 | Formulating a new corporate strategy | |
| 2 | 4 | Responding to market developments / behaviour of competitors | |
| 3 | 6 | Risk management | |
| 4 | 2 | Talent (recruitment, retention, etc.) | |
| 5 | 8 | Sustainability / corporate social responsibility | |
| 6 | 3 | Digitalisation / robotics / automation | |
| 7 | - | HR challenges at management level | |
| 8 | - | Corporate transactions (acquisitions, cooperation arrangements and mergers) | |
| 9 | 4 | Improving efficiency / optimising internal processes | |
| 10 | 8 | Compliance (with legislation and internal codes of conduct) | |
Interviews
President of the Board of Banque Cantonale de Genève, compenswiss, Varia US Properties, Enki Capital, NID and Patrimonium Asset Management
Manuel Leuthold
“I believe the Board’s long-term objective is to create value for the shareholders. If this objective is properly understood, it should encompass all stakeholders and all other major long-term dimensions.”
Member of the Board and the Compensation Committee at EDAG Engineering Group, Leonteq, Medacta and PolyPeptide
Philippe Weber
“Interestingly, companies are sometimes punished by shareholder representatives or the media for voluntarily being more transparent about remuneration issues than is required by law or for being more transparent than peer companies. Companies therefore need to find the right level of transparency.”
Previous board survey editions
swissVR Monitor II/2020
The Boards of Directors' perspective on COVID-19: Learning the lessons for the next crisis
swissVR Monitor II/2019
More agile but more complex: the impact of digitalisation on boards and companies
