May 7 (Bloomberg) -- UBS AG Chairman Axel Weber said compensation at Switzerland’s biggest bank has to be in line with competitors to attract professionals at all levels, defending the board’s pay decisions for executives.
“We can be proud that we have Sergio Ermotti, a Swiss national who, thanks to many years of experience internationally, is well equipped to lead the bank,” Weber said in a speech at the annual shareholder meeting in Basel today. “If you want to have the best possible people in the business, you also have to compensate them in line with the market. That’s how it works in sports and in industry, including the financial sector.”
UBS said in March it boosted the compensation of Ermotti, the bank’s 53-year-old chief executive officer, by 21 percent to 10.73 million Swiss francs ($12.3 million) for 2013. That’s the last time the decision will fall exclusively on the bank’s board as Swiss governance rules change.
Investment-banking head Andrea Orcel’s pay surpassed Ermotti’s, making him the highest-paid executive at UBS with 11.43 million francs in remuneration last year. UBS didn’t disclose Orcel’s total pay for 2012, when he received 24.9 million francs in deferred cash and deferred stock upon joining.
Starting next year, shareholders will have a binding vote on executive compensation for Swiss companies. UBS is proposing to hold investor votes in advance on compensation for the board of directors and the fixed pay for members of the executive board, as well as a vote on bonuses for the executives after a financial year ends.
“We want to find the right balance,” Weber said. “On the one hand, the right balance between reasonable financial incentives and compensation for employees that is in line with the markets, and on the other hand, the long-term profitability of the bank and value for shareholders. The incentives must be set in such a way that employees and management increase value of the company over the long term.”
Shareholders today voted 86 percent in support of the bank’s 2013 compensation report in a consultative vote, and approved the bank’s proposal to amend articles of association that allow binding votes on pay in the future. Investors also backed permitting variable compensation of as much as twice fixed pay for employees subject to European Union bonus rules in an advisory vote.
Weber also said that UBS’s current strategy to focus on money-managing businesses is “working.”
“Our net new money grew faster than our three European competitors combined,” he said of 2013 results. “The sharp rise in our share price also reflects the restored confidence in the bank.”
To contact the editors responsible for this story: Frank Connelly at firstname.lastname@example.org