Executive Compensation in Switzerland - An Empirical Study
Résumé
Executive compensation has been widely explored in environments where public disclosures of salaries and benefits are the norm. In the US and in the UK, numerous studies have concluded that there is a positive relationship between CEO compensation and firm performance. During the 20th century, Switzerland kept its distance with the Anglo-Saxon approach to Corporate Governance and maintained its way of management based on the search for consensus, the tradition of performance and confidentiality. Like most western countries, Switzerland did not stay immune from corporate scandal. Recent shake-ups have forced various authorities to reconsider the Corporate Governance mechanisms in place as well as public disclosure rules. For the first time in 2002, publicly listed companies were asked to report earnings for their directors and executive compensation. Using a sample of 116 firms listed in Switzerland, the purpose of the study is to shed some light on the compensation of executives in a country that is known to be rather conservative on that point, but which has enjoyed profitable economic growth for decades. Results tend to show that firm size, systematic risk and certain governance structures can largely explain executive earnings, however, no pay-performance link was found.