Nestlé Details Governance Changes To Comply With New Swiss Law
March 14, 2014 Leave a comment
Nestlé Details Governance Changes To Comply With New Swiss Law
Food Company to Allow Holders to Vote for All Board Members Annually, Choose Chairperson
JOHN REVILL
March 11, 2014 2:00 a.m. ET
Nestlé SA NESN.VX -0.08% on Tuesday detailed proposed changes to the company’s rules that include annual elections of board members and binding votes on executive pay.
In a letter to shareholders, Chairman Peter Brabeck-Letmathe said Vevey-based Nestlé will put each of the company’s 13 board members up for election at its April 10 general meeting, part of an annual vote mandated by the new law. Previously, board members had three-year terms.
Shareholders also will be able to vote for the chairman directly, something the board had previously done.
The maker of KitKat chocolates and Nescafe coffee also said shareholders will be given binding votes on the aggregate compensation of both the executive committee and the board of directors. The binding vote will go into effect next year, according to the company.
Nestlé is one of the first major Swiss companies to outline the changes it is making to comply with a new law that codifies the principles of the so-called Minder initiative, a set of rules for publicly traded companies that voters overwhelmingly approved last March. The initiative was spearheaded by Thomas Minder, a businessman and politician.
The law went into effect on Jan. 1, although companies have until the end of 2015 to implement all its components. The law provides for fines and prison sentences for companies that violate its provisions.
In his letter, Mr. Brabeck-Letmathe said the changes would have a profound effect on the way companies in Switzerland are run. He fretted the new rules created the potential for “short-termism” and said general meetings could become “more legalistic” in nature as a result of the rules.
Mr. Brabeck-Letmathe said the revisions were necessary to “create the legal certainty that we need for our company and to live up to our own commitment to be at the forefront of corporate governance practices in Switzerland.”
Only a minority of companies is completely prepared for the new law, according to a recent PricewaterhouseCoopers survey. PwC said many companies are talking with each other about how the rules can be implemented.
“From our survey it is clear that organizations don’t want to stray far from the pack when complying with the Minder requirements,” said Robert Kuipers, a partner at PwC. “All eyes will be on the first organizations to disclose their approach to the Minder requirements over the course of 2014.”
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