A Remuneration Index: Quality of the Remuneration Disclosure in Swiss Firms During Last 10 Years

Abstract

This paper analyses the quality of the remuneration disclosures in Switzerland during last 10 years (2000 to 2009). First, it briefly mentions the corporate governance/remuneration principles of Swiss regulatory bodies, EU, UK, USA, and ICGN. Then, it focuses on the ICGN and the Swiss remuneration standards to analyze 100 Swiss firms on SPI UBS 100 Index, Swiss Stock Exchange. It is reasonable that Swiss compensation principles are the main source to establish a remuneration quality index since they are traded in the Swiss Stock Exchange. On the other hand, the ICGN standards were also picked because it represents the international investors’ point of view. The remuneration index is made up of 39 questions in line with all items of the Swiss and ICGN remuneration principles, and it includes 4 sub-indices. The quality scores of each individual firm for each year were evaluated in the scale from 1 (very bad) to 6 (very good). 824 remuneration or corporate governance reports were investigated and they were scored for the quality of disclosures over 10 years by the help of the remuneration index. Finally, I have noted the quality of the remuneration disclosures improved after 2007, since they are more consistent with the stated regulations. Moreover, over the last 10 fiscal years (2000 to 2009), financial and industrial sectors, specifically banks and industrial engineering sectors, are more successful in the reporting of the remunerations. To sum up, the descriptive results of this paper may help the academics and the regulatory bodies grasp the quality of the implementation of remuneration principles in the Swiss corporate business and develop further researches on this issue.