Lugano: the UDC proposes greater transparency regarding compensation

Context

TL;DR

• UDC: remuneration at companies in which Lugano holds stakes published every year
• Board members and CEO identified by name
• Other members of Executive Management: aggregate amount
• Implementation through articles of association or shareholders' meetings

Key facts

• Promoter → UDC motion, first signatory Alain Bühler
• Scope → companies in which the City of Lugano holds stakes
• Board of Directors → total remuneration by name
• CEO → total annual salary by name
• Other executives → total aggregate amount
• Publication → management report, annual report or holdings report
• Criteria → uniform and comparable over time
• Implementation → articles of association or proposal to other shareholders according to Lugano's shareholding

The proposal in the Municipal Council

In Lugano, a motion by the UDC, with Alain Bühler as first signatory, calls for the remuneration of the top executives of companies in which the City holds stakes to be made public every year. The request concerns members of the Boards of Directors and the highest-ranking operational officer, with the individual amounts received specified.

The motion clarifies that the aim is not to determine how much the top executives should earn or to interfere in management. Instead, the UDC proposes a general transparency standard for companies in which Lugano invests public capital and exercises its shareholder rights. According to the signatories, the legal form of a joint-stock company ensures management autonomy; the presence of public capital nevertheless entails a «particular responsibility» toward the community.

The model distinguishes between the Board of Directors and Executive Management. For each Board member, publication should be by name and concern total remuneration, with the main components and any compensation for chairmanships, committees or other corporate positions. For the CEO, general manager or highest-ranking operational officer, the total annual salary should be indicated by name. The other members of Executive Management would instead be reported through a single aggregate total.

The intended location is a freely accessible official document: management report, annual report, holdings report or another equivalent document. The criteria should remain uniform and comparable over time, including, whenever possible, a comparison with the previous financial year. The request concerns only what the companies pay for the functions performed. Private income, assets, tax situation and other personal information are excluded.

For the signatories, regular publication would serve to replace comparisons based on rumours, fragmented information, partial reconstructions or speculation with institutional data. The UDC would like to extend the principle to all of the City's corporate holdings, taking into account Lugano's shareholding.

Where the City fully controls the company or has the necessary stake to amend the articles of association, the Municipal Executive should immediately take steps to include the publication requirement. Where the votes are insufficient, it should propose the same rule to the other shareholders and support it at general meetings. Finally, the motion asks the Municipal Council to approve the proposal and instruct the Municipal Executive to follow it through.

Operational details

What would change in how compensation is read

If the Municipal Council were to accept the motion, the expected effect would be primarily informational: the public would be able to examine in a more orderly way how much companies with public holdings pay their top executives. It would not, however, be a decision on the level of remuneration. The proposal seeks to make the data visible, not to set an amount or take over the companies' operational management.

The model creates three distinct levels of analysis. For members of the Board of Directors, the data would be linked to the individual and accompanied by the main components and any allowances. For the CEO, general manager or highest-ranking operational executive, the focus would be on the total annual salary. For the other members of General Management, the reader would instead find an aggregated total, without the same breakdown by name.

The second practical element is the corporate process required to apply the rule. When Lugano's shareholding independently allows the articles of association to be amended, transparency can be included directly at that stage. When the City's votes are insufficient, the proposal must go through discussions with the other shareholders and receive support at general meetings. The motion therefore does not describe a single procedure valid for all holdings: the path depends on the City's position in the individual company.

The request for uniform criteria is intended to make the data understandable over time. Comparison with the previous financial year, where possible, would make it possible to observe the evolution of remuneration without relying on partial reconstructions. That comparison, however, would not by itself establish whether compensation is appropriate: the signatories specify that the motion does not seek to determine what the level of remuneration should be.

There is also a clear boundary between corporate transparency and the private sphere. The document should concern only amounts paid for the functions performed, without becoming an overview of private income, assets or tax situation. Anyone wishing to keep these two levels separate can consult busta paga svizzera for their individual remuneration; the proposal, instead, concerns the data published by the companies. Finally, the signatories refer to the experience of other Swiss cities in Public Corporate Governance and argue that a statutory rule is compatible with the entrepreneurial autonomy of public limited companies.

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Key points

The planned course of action

The motion sets out a process structured according to the City's shareholding stake. If the City Council accepts the proposal, the Municipal Council should follow it up in four steps:

1. Initiate the process requested by the City Council to apply the principle to all of the City's corporate shareholdings. 2. Verify, for each company, whether Lugano has full control or the necessary stake to amend the articles of association. 3. Include the publication obligation in the articles of association and promptly initiate the necessary steps when the amendment can be made autonomously. 4. Propose the same rule to the other shareholders and support it at general meetings when the City's votes are not enough.

Once publication is required, the document to consult each year could be the management report, the annual report, the shareholdings report or another freely accessible official document. The practical check consists of verifying that the selected criterion remains consistent and that, where possible, a comparison with the previous financial year is also available.

The figures should then be examined by distinguishing the different levels. The compensation of an individual board member should include the total and the main components, including any allowances for chairmanships, committees or other corporate offices. For the top operational manager, the total annual salary disclosed by name should be sought. For the other members of Executive Management, the aggregated figure should instead be considered. The scope does not include private income, assets or tax status.

Including the rule in the articles of association would also serve a preventive function: according to the signatories, anyone accepting an appointment would know the publication obligations from the outset. For one's personal situation, separate from the shareholdings report, it is possible to consult the dichiarazione delle imposte. For a separate comparison of employment income, use the calcolatore stipendio.

Source: tio.ch