Direct democracy is one of the things Switzerland's known for. Its citizens can vote on a whole range of political issues at the local, cantonal and national level. By saying 'yes' to the Minder initiative, the Swiss have now given shareholders more rights, too, in that they are now, annually, called on not only to vote on the total remuneration and benefits for their company's directors and members of its executive board, but also to elect the directors themselves. One important requirement introduced by the initiative also has to do with companies' pension funds. The initiative requires that: "pension funds vote in the interests of their insured members and disclose how they have voted."
That requirement sounds simple, but putting it into practice isn't. For tax reasons and in order to cut costs, fewer and fewer pensions are investing directly in equities. They find it more straightforward and efficient to hold them through special investment funds and foundations. That's why many of them no longer have direct investments in Nestlé, Roche or Swatch shares, and why they can no longer themselves vote at those companies' general meetings, even if they want to. If they actually had direct investments in companies, pension funds would, in practice, find exercising their voting rights a highly complex and laborious business – especially if the desire for diversification has led them to fill their equity portfolios with lots of Swiss securities, including those of smaller companies.
That's why, all of three years before Minder, UBS Asset Management Switzerland took the initiative in rolling out the "UBS Voice" service for pension funds – the first of its kind on the market. It enables pension funds with indirect holdings in the biggest Swiss public companies through UBS institutional investment funds and foundations to exercise their voting rights. And not only can they make their voices heard, but UBS will also compile a record of how they voted. That's a vital tool enabling pension funds to play their part in ensuring that the companies in which they invest on behalf of their beneficiaries are properly run whether or not they intend to vote at all the general meetings of the 30 biggest Swiss companies or just on specific agenda items that matter to them.