Swiss voters last year approved a constitutional initiative against excessive compensation—the so-called Minder Initiative—and it went into effect in 2014. It introduces rules pertinent to corporate governance, most notably a binding shareholder vote on the compensation report and prohibition against certain forms of executive compensation.
But Minder invokes a number of less-discussed regulations touching upon the board, such as annual reelection for all members—including the chairman and all members of the compensation committee. Pension funds, which hold large blocks of shares, must also disclose how they voted. These secondary facets of the Minder Ordinance have important consequences for board effectiveness and recruitment in the future.
The focus of board elections will inalterably shift toward explaining the merits of retaining each director based on the individual value (and capabilities) he or she adds to the board. As a result, director recruitment will need to take into account crucial new competencies for directors: tolerance for ambiguity; high levels of self-awareness, integrity, and trust; and a focus on collaboration over competition.