By Edouard Borel
In Switzerland’s entrepreneurial ecosystem, the board of directors can no longer be seen as a mere rubber-stamping body or a circle of honorary dignitaries. In the face of denser legal obligations, market volatility and the emergence of new systemic risks, the supreme governing body of companies has become deeply professionalised. Whether defining corporate strategy, overseeing the alignment between risks and financial resources, or bearing personal liability for breaches with their own private assets, directors are now subject to comprehensive, non-transferable and joint liability. Far from being just a cost or a source of internal friction, remuneration is the key steering tool for attracting the right expertise, aligning interests and, above all, ensuring the independence of judgment of the supervisory body. But how do Swiss companies, and in particular small and medium-sized enterprises (SMEs), structure these incentives? What are the fundamental trade-offs between attendance fees, fixed retainers and variable components? A look at best governance practices in light of the latest swissVR guide, produced in collaboration with PwC Switzerland.
To preserve sound governance, doctrine and codes of best practice, such as economiesuisse’s Swiss Code of Best Practice for Corporate Governance, recommend one golden rule: remuneration for non-executive board members should be based on fixed elements in order to prevent any conflict of interest. The range of instruments used in the Swiss market rests mainly on four pillars:
1 • Basic flat fees (fixed indemnity): this is the most common and the most sound model. A fixed annual amount is set to cover the board’s regular activity. Its main advantage is predictability for the company and a complete disconnect between financial gain and the number of deliberations. Unsurprisingly, the role of chairperson is granted substantially higher fees because of the broader workload involved (preparation, agendas, close ties with management) and the increased responsibility.
2 • Committee fees: in mid-sized companies or more complex structures with standing committees (audit, compensation or strategy committees), additional flat budgets are often allocated to compensate for the technical effort and extra time invested by their members.
3 • Attendance fees: this system compensates directors on a per-meeting basis, in a linear manner. While this model offers apparent fairness linked to work performed and proves agile in major crisis management situations (with a multiplication of extraordinary meetings), it has the drawback of making budgeting more complex and of overlooking the invisible but crucial work of preparation and individual follow-up.
4 • Variable remuneration (bonus and tantièmes): very common for operational management, the variable portion remains marginal, if not forbidden, for non-executive directors. Introducing a bonus indexed to the year’s result (EBIT, profit) can cloud the supervisory body’s long-term judgment in favour of short-term gains. Moreover, from a tax perspective, allocating profit shares in the form of tantièmes can lead to a less favourable reclassification of these flows for the company.
Remuneration structures are closely correlated with the company’s economic scale. The compiled data show that the size of the organisation and its turnover are the main levers shaping compensation levels:
As for specialised committees, where they exist and are billed separately, the median budget for their chair generally ranges from CHF 5,000 in smaller structures to CHF 10,000 in larger ones. Attendance fees per meeting, meanwhile, range from CHF 500 to CHF 875 at the upper end of the corporate scale.
In family-owned and heritage SMEs, modelling often runs into role confusion. It is not uncommon for one and the same person to wear the hats of majority shareholder, chair of the board and chief executive. This overlap creates a genuine methodological and tax challenge. Sound governance requires clear boundaries between these three status categories:
Remuneration for non-executive board members should be structured around fixed elements to prevent any conflict of interest.
Trying to optimise financial flows for tax purposes by sharply reducing the operational salary or director fees in favour of dividends alone, which are exempt from social security contributions (AVS/AI/APG), is a high-risk calculation. Cantonal tax authorities and compensation funds (AVS) keep a close watch on such practices. Where there is a clear imbalance between the work performed and the low level of declared earned income, the authorities regularly reclassify these payments ex officio, converting dividends into salary subject to contributions, together with substantial tax reassessments.
In addition, keeping fees too low creates gaps in occupational pension coverage (LPP), sometimes with dramatic consequences at retirement. It should be recalled that, under Swiss law, a directorship is statutorily regarded as dependent employment. Attendance fees and honoraria received must therefore be subject to standard social deductions, unless payment is made transparently to the third-party corporate entity employing the director.
Two further areas of vigilance deserve particular attention from board chairs:
In nearly 41% of Swiss SMEs, some directors (often lawyers, fiduciaries or consultants) also provide technical advisory services to the company they oversee. This dual relationship is a major source of conflicts of interest. To comply with the rules on “self-contracting” (Art. 718b CO), these advisory mandates must be covered by a separate written contract, approved by the entire board (with full transparency) and billed strictly at market terms (at arm’s length). In addition, because joint liability can be triggered by creditors in the event of bankruptcy, taking out Directors and Officers (D&O) insurance has become an essential prerequisite for attracting independent external profiles. While 93% of large unlisted companies have this cover, the figure is still only 76% among smaller firms (10 to 49 employees).
In conclusion, there is no such thing as the perfect remuneration model. However, at a time when sustainability and transparency are becoming the foundations of market trust, designing a clear remuneration policy, documented in a charter or organisational regulations, is the hallmark of SMEs built to last. Paying a board fairly means ensuring that the people around the table are free-thinking, critical and fully committed to preserving the economic flagship they are charged with guiding.
Sources and references: data drawn from the exclusive survey and the swissVR Practical Guide (December 2025 edition), co-authored by PwC Switzerland (Angela Bucher, Agnès Hoevenaars-Blust, Roman Schneider, Ana Lucic).
Within the architecture of Swiss governance, the role of board chair occupies a singular place, often mentioned but rarely analysed for what it truly is: a function that is at once more exposed, more demanding, more strategic, more political and riskier than that of the other board members. While public debate is often focused on directors’ remuneration levels in general, the specific nature of the chair’s mandate remains a blind spot. Yet understanding this distinction is essential to grasp the governance dynamics shaping Swiss companies.
The chair of the board is not just another director. He or she is the guarantor of the body’s proper functioning, the conductor of the debate, the board’s first point of contact with executive management and, in many cases, the public face of governance.
Where a director brings a perspective, expertise or sector-specific insight, the chair provides overall coherence. He or she sets priorities, arbitrates tensions, ensures the quality of information provided to the board and makes sure strategic decisions rest on a solid foundation. This heightened responsibility translates into a markedly heavier workload: meeting preparation, committee coordination, regular interaction with the CEO, handling sensitive situations, anticipating emerging risks. The chair’s mandate is a continuous commitment, far beyond formal meetings.
This intensity is matched by a particular level of exposure. The chair bears specific responsibility for the board’s proper functioning, without reducing the collective and individual accountability of the other directors. In a crisis, expectations, criticism and requests for explanations converge on the chair. Legal liability, already heavy for a director, takes on an additional dimension when it concerns the person presiding over the body. This exposure, which combines reputational and legal risk, by itself justifies differentiated remuneration. That difference is neither a privilege nor a favour, but the direct reflection of a more demanding mandate. In companies with turnover between CHF 10 million and CHF 50 million, the median is around CHF 35,000 for a chair, compared with CHF 15,000 for a member. In larger structures, the gap widens further, reflecting the growing complexity of the issues and the density of responsibilities.
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