UBS ex-executive renounces CHF 12m in exit pay

10 November 2008

BERN – Former UBS AG Chief Executive Peter Wuffli has renounced CHF 12 million in payments he was to receive under his contract when Switzerland’s largest bank fired him as the subprime crisis began, the bank said Sunday.

A bank spokeswoman confirmed what Wuffli, who left Zurich-based UBS in July 2007, told the weekly NZZ am Sonntag in an interview Sunday.

"I understand the widespread indignation," Wuffli said in disclosing that he already had turned down a payment of "substantial millions" a year ago and that he went to the bank recently and told it to keep the rest of the CHF 12 million.

The move by Wuffli adds to pressure on other former UBS top managers, including former Chairman Marcel Ospel, to give back bonuses and other payments credited to them by the bank as it ran up such losses that it received a near USD 60 billion bailout package from the Swiss government in October.

"I have voluntarily renounced a total of CHF 12 million that was due me under my contract," Wuffli said in the interview. "High payments cannot be justified for top people who leave an enterprise suffering difficult circumstances."

UBS spokeswoman Sabine Jaenicke confirmed Wuffli’s decision and said it was the first by any former top manager so far.

"It remains to be seen if other people will follow Wuffli’s example," she said.

The bank is due to report to shareholders later this month how much in such payments is being returned by all executives.

She refused to say how much more was due to Wuffli.

The payments were not performance bonuses but part of Wuffli’s salary package. He was entitled to a full year’s salary under the contract in effect when he was fired 6 July 2007.

The bank’s 2007 annual report says a total of CHF 60.6 million was assured to Wuffli and two other executives – financial chief Clive Standish and investment banking head Huw Jenkins – who left in September with entitlement to another year’s salary. The report doesn’t break down the total by individual executive.

In addition, the three executives together received nearly CHF 33 million for the time they were still in office last year.

In November, the bank disclosed that no bonuses will be paid to Chief Executive Marcel Rohner and the 12 current board members. UBS Chairman Peter Kurer said he would forgo any bonus for 2007 and 2008 until the bank has recovered from huge losses in the global financial crisis.

It is unclear how much bonus Kurer would have been entitled to, but his salary without additional payments is CHF 2 million.

Former chairman Ospel saw his salary drop from 26.6 million francs in 2006 to 2.57 million francs in 2007 when he renounced a bonus because the bank lost billions in writedowns on subprime mortgage investments. Ospel stepped down in April under pressure from shareholders.

[AP / Expatica]