Board composition & evaluation

Board size

The average board size in the SMI remains stable at 10.3 members, as does the median at 10 members. The smallest board in our sample is found at Geberit, consisting of six members. The largest board is recorded at Compagnie Financière Richemont, with 16 members, three of whom — chair, CEO, and CFO — are executive directors. The sizes of both boards have remained unchanged since last year.

The roles of chair and chief executive

In accordance with the Swiss Code of Best Practice for Corporate Governance, there is a clear separation between the role of CEO and chair.

With Miljan Gutovic assuming the CEO position at Holcim on May 1, 2024, the interim combination of the CEO and chair roles at Holcim has concluded. This means that a separation of these positions is now in place across all SMI companies. At a small number of SMI companies — Alcon, Compagnie Financière Richemont, Nestlé, and Partners Group — the CEO serves on the board as an executive director.

Independence

75% of SMI companies consist exclusively of non-executive directors and only four companies have executive directors on the board. Aside from these executive directors, only six non-executive directors are considered not independent.

Overall, 93% of board members across the SMI are classified as independent, as well as 80% of the chairs. While the proportion of independent board directors in Switzerland remains among the highest in Europe, distinct independence criteria between leading European stock exchanges also have to be taken into account.

Unlike other jurisdictions, the Swiss Code of Best Practice for Corporate Governance (§15) recommends that directors should “have no or comparatively minor business relations with the company”. This allows board members to be remunerated in shares, which is a common practice in Switzerland. By contrast, this approach would constitute a conflict with independence requirements in the UK and Germany, for example.

In Switzerland, the main reasons for board members to not be considered independent include recent engagements as executives for the company, significant company ownership stakes, or exceeding the organisation’s own guidelines on independence in tenure and age.

Three quarters of SMI constituents have self-imposed limits on eligibility criteria, while only five companies do not set formal boundaries for the re-election of their board members. Those who declared such limits in their Articles of Association or Corporate Governance Reports opted in equal measure to regulate age (50%) or tenure limits (50%). It is also notable that 25% of the constituents apply both age and tenure limits on the eligibility of their board members.

Age and tenure

There is a discrepancy between both the average age and tenure of chairs and the rest of the board members of SMI companies. Chairs tend to have longer tenures and are older compared to the rest of their boards. This might indicate a preference for more experience, but also for how much SMI companies value the institutional knowledge that a long-serving chair can be expected to provide.

Age and tenure of chair and directors

	Tenure	Age
Chair	10.8	65
All board members	6.1	61.5

When considering the tenures of chairs and board members in greater detail, the contrast becomes even starker. The majority of chairs of SMI companies have been in the role for longer than nine years. This length of tenure in the UK, for example, would mean that a director would no longer qualify as independent.

Board renewal

We have found that 11 of the 20 SMI companies (55%) appointed new board members. The number of new directors appointed in 2024 was 15, down from 20 new directors in 2023. Of the 15 new SMI directors, 80% are in a portfolio career and just 20% are still active executives. Nine are men and six are women. Fifteen of the 17 board members who departed were men.

Over the last three years, 30 women and 29 men were appointed as board members of SMI companies. The pace of female appointments has steadily declined over this period, dropping from 58% to 40%. The comparatively higher pace of female board appointments in 2022 was possibly rooted in the 30% gender quota passed in 2020 by Switzerland’s National Council which impacted publicly listed companies with more than 250 employees.

External commitments

External commitments remain popular for SMI board members: 59% of non-executive board members hold external board seats in publicly listed organisations. We also found that 40% have external executive positions (both figures up from last year when it was 58% and 36% respectively).

Evaluation

	2023	2024
% NEDs with additional board commitments	58%	59%
% NEDs with executive positions	36%	40%

Overboarding

Proxies and institutional investors are paying closer attention to chairs and directors who have external board roles. Their main concern is to prevent directors from taking on too many responsibilities that could hinder their effectiveness as board members. Most proxies use a point scoring system, and we adopted a simplified form as follows:

• Non-executive directors: 1 point
• Chair: 2 points
• Sitting executives: 3 points

Using this scoring system, we examined the commitments of board members from SMI companies and found that they all fell below the six-point limit that proxy advisors associate with being overcommitted.

We also observed a notable difference between genders (as illustrated in the graph below). Female non-executive directors were more likely to be at capacity than their male peers. Conversely, female board members more frequently served on only one board compared to their male colleagues.

Both findings align with our expectations that established female non-executive directors are in high demand, and ongoing efforts to enhance gender diversity have led to a growing number of new women directors who are still building their board portfolios.

Board evaluations

Fifteen companies (75%) disclosed their method for board evaluation in their annual corporate governance or annual reports. Of these, 14 conducted an internal review, while only one company opted for an external review.

Five companies (25%) did not indicate that they had engaged in any form of board evaluation during this period. This is a sharp decline from the previous year, when 95% of SMI companies conducted board evaluations and is a particularly significant drop when compared toother European countries.

External board evaluations are becoming increasingly prevalent across Europe, with French companies having the highest percentage of externally facilitated reviews (on a three-year rotation) in 2024, followed by the UK and Italy. In several countries, governance codes recommend that boards undergo an externally facilitated evaluation at least once every three years.