Board meetings
SMI Expanded companies held an average of eight scheduled meetings during the period covered by their annual reports.
Boardroom dynamics inevitably changed as boards complied with social distancing measures forced by the Covid-19 outbreak, and as the use of technology to substitute in-person meetings became more acceptable. Annual reports suggest that the pendulum is swinging back to a preference for in-person meetings, although we are likely to see a combination of in-person and virtual meetings for some time to come.
Attendance at meetings remained high, at an average of 97%, marginally down from the 98% recorded in 2021.
Board committees
The average number of committees seen at SMI companies is four, slightly up from 3.7. Among SMI Mid companies, the average fell very slightly to 3.1, from 3.2. The number of board committees per company ranges from between two and seven, a somewhat expanded range from 2021, when it lay between two and five.
Number of committees
| % companies |
2 |
3 |
4 |
5 |
6 or more |
| SMI |
10% |
25% |
30% |
30% |
5% |
| SMI Mid |
25% |
39% |
32% |
4% |
0% |
Audit committees met on average 6.6 times, followed by remuneration committees with an average 5.5 meetings, and nomination committees with 5.5 meetings.
Credit Suisse committees convened most frequently during the fiscal year, assembling the audit committee members 17 times (as it did in 2021) and its governance and nominations committee 21 times (up from 16).
In general, the risk committee is the most common after the core audit, remuneration, and nomination committees. Three companies (Credit Suisse, Novartis, and UBS) have a standalone risk committee; others combine risk with audit, finance, governance, or investment mandates.
Committees dealing with innovation, digital, technology, and sustainability are the next most adopted, established at 23 company boards in our sample. So far, 12 companies (25%) have board committees dealing with sustainability.
Board chair on Nomination committees
Nomination committees are the body appointing core executive leadership positions and furthermore responsible for the succession planning of the board itself. In light of this important function, they are widespread and only 15% of companies in the SMI Expanded do not feature a committee dedicated to nominations. For 29 % of companies, the chair of the board also heads the nomination committee while for 17% the chair sits on the nomination committee but is not presiding it. 39% of companies on the SMI Expanded do not have the chair as a member of the nomination committee, which is considered best practice as it creates distance between the chair and the body possibly planning the chair’s own succession.
Our perspective: Addressing the challenge of ESG
The topic of sustainability, driven largely by investor focus on environmental, social and governance (ESG) issues, has risen rapidly up the board agenda in recent years. Stakeholders are becoming increasingly active, holding companies to account. For boards, regardless of sector, securing the social licence to operate and minimising the negative impact of the business on society and the natural environment is an urgent concern. Boards therefore need to be well-informed about ESG matters in order to exercise proper oversight of effective risk management.
Boards in Switzerland (like those across Europe) are adopting a variety of approaches to address ESG challenges. A growing number are forming dedicated committees with a specific remit covering sustainability and/or ESG. Some companies are folding ESG-related work into existing committees, but the majority of boards are choosing to address these issues at main board level.
The least common solution is to hire a director with expertise in a specific area of ESG material to the business; instead, there is a growing focus on raising the awareness and understanding of all board directors, for example on climate change, decarbonisation, or human rights in the supply chain. To oversee risk management effectively, boards must stay collectively well-informed about relevant ESG matters.
In a recent survey of 590 global board directors conducted by Spencer Stuart and Diligent Institute, 43% of respondents said that primary ESG oversight takes place at the full board level, followed by nominating/governance committee (30%), and ESG/sustainability committee (15%). Only 20% of directors reported that their boards were looking to appoint new directors with ESG expertise, although 29% of respondents said they were conducting an ESG-specific board-effectiveness review to identify current gaps.
Board evaluation
Twenty-six companies (54%) disclosed their approach to board evaluation in their annual corporate governance report/annual report: Twenty-two of these underwent an internal review during the fiscal year examined, while just two companies underwent an external review. Twenty-two companies (46%) did not report having undergone any form of board evaluation during the period. SMI companies (60%) rely more on board evaluations than SMI Mid companies (50%).
External board evaluations are increasingly common across Europe. French companies had the highest proportion of externally facilitated reviews in 2022 (60%), followed by the UK (42%) and Italy (40%). In many countries, the governance code recommends that the board open itself up to an externally facilities board evaluation at least every three years.
Guidance
for getting the most out of your board’s next annual assessment