UBS to hold back management bonuses: report
17 November 2008
ZURICH – Switzerland’s largest bank plans to delay the bonuses it pays to senior managers to discourage the kind of risky short-term behaviour that has cost it more than CHF 45 billion over the past year, according to a newspaper report Sunday.
Swiss weekly Sonntag reported that UBS AG will freeze the bonus payments for three years, and allow shareholders to approve managers’ pay packets.
Andreas Kern, a spokesman for UBS, declined to comment on the report except to say that the bank will issue a statement Monday outlining the changes it plans to make to its compensation system.
The move follows strong criticism of the bank by politicians, unions and the Swiss media after it was revealed that senior officials had been paid bonuses worth millions of francs annually while presiding over an investment strategy that eventually forced UBS to seek a USD 60 billion government (CHF 71.5 billion) bailout last month.
On Saturday, around 3,500 people took part in a trade union rally in Zurich to protest the bailout and what Paul Rechsteiner, a Social Democratic lawmaker, called the "bonuses excesses" at Switzerland’s big banks.
Earlier this month, former CEO Peter Wuffli said he would return a CHF 12 million "golden parachute" he received after leaving UBS last year.
Other former top managers, including former chairman Marcel Ospel, have been urged to give back bonuses and other payments credited to them at a time when the bank was investing heavily in the U.S. subprime mortgage market, which collapsed in July 2007.
Meanwhile, the bank has also said that no bonuses will be paid to CEO Marcel Rohner and the 12 current board members, and UBS chairman Peter Kurer said he would forgo any bonus for 2007 and 2008 until the bank has recovered from its huge losses.
UBS will hold a special meeting 27 November to inform shareholders about the changes to its compensation system and allow them to vote on measures related to the government bailout, which has allowed the bank to dispose of most of its so-called "toxic assets" and draw a line under a disastrous year for one of Europe’s biggest financial institutions.
[AP / Expatica]