On 10 April 2017, the Swiss SIX Exchange published Communiqué No. 3/2017 announcing the publication of a completely revised Commentary on the Directive on Information Relating to Corporate Governance (DCG). The Commentary (now: Guideline) contains further information on the individual requirements of the DCG and its Annex. The Guideline (Commentary) on the DCG dates back to 2002 and was updated in 2007. It had to be adjusted now given that it was partially obsolete because of the amendments to the DCG following the entry into force of the Ordinance against Excessive Compensation at Listed Companies (OaEC) on 1 January 2014 and of the Financial Market Infrastructure Act on 1 January 2016, as well as other recent rulings.
The Guideline now includes three columns: The first refers to the DCG Article, the second provides explanatory notes to the SIX Exchange Regulation (SER) practice, and the third lists sanction notices and decisions (as of 1 January 2017). The Guideline is available on the SER website in German, English and French.
The Guideline does not include any substantive changes, but rather clarifications on what to disclose. From a compensation perspective, the following has been clarified:
- A requirement for companies that are not subject to OaEC to mention this in the Corporate Governance (CG) report (Note 25).
- Clarifications on Article 8 DCG “Reporting date” (that is, the balance sheet date) and the need to indicate any subsequent important changes between the reporting date and the publication of the annual report: This includes any essential changes to the composition of the board of directors or the executive committee, or any important factors during the reporting year that are no longer relevant on the balance sheet date (Notes 48-53, 124 + 125).
- A requirement to disclose information on compensation so that market participants can assess whether the chosen compensation model is appropriate in terms of the performance incentives offered. This includes a retrospective disclosure on the changes in compensation over the course of the financial year and an explanation as to why compensation fell or rose in the year under review in comparison to the preceding year (Note 204).
- The need to disclose in the CG report whether a new member of the board of directors or the executive committee received special compensation (“golden handshake”) upon joining the company (Note 223).
- The requirement to disclose the names or at least a clear description of the companies used for any pay comparisons. Terms such as “international companies” or “companies of a similar size” are not sufficient (Note 231).
- A prerequisite to explicitly disclose discretionary decisions (Note 241).
- A requirement to set out the ratio (range or maximum value) between fixed and variable compensation (Note 245).
- The need to provide certain information on criteria used (if any, and if not personal performance targets) to set compensation and their weighting; if complete discretion is used for the weighting reference to this fact must be included (Note 252).
It is also clarified that companies can either reference any rules included in their articles of association with a direct weblink (note however the requirement to not only generally reference the website, but include an exact, direct weblink/path and the need to keep it available for five years from publication, acc. to Article 6) or provide a summary. However, if a summary is provided it needs to be ensured that all essential information is contained (Note 255 et al.).
Further details can be found here.