Julius Baer CEO Collardi’s Compensation Falls 12% in 2013Giles Broom
Julius Baer Group Ltd. Chief Executive Officer Boris Collardi received lower compensation a year after shareholders voted against the bank’s remuneration report.
Julius Baer awarded Collardi, 39, compensation of 5.9 million Swiss francs ($6.7 million) for 2013, down from 6.7 million francs a year earlier, after an 800,000-franc one-time payment related to the acquisition of Bank of America Corp.’s non-U.S. wealth units wasn’t repeated, the Zurich-based company said today in its annual remuneration report.
Compensation for the seven-member executive board rose to 16.9 million francs, from the 15.2 million francs awarded to six individuals in 2012.
“The board of directors reacted swiftly to the outcome of the advisory ‘say-on-pay’ vote and immediately initiated a revision of the compensation framework,” Daniel Sauter, chairman of the board, and Gareth Penny, chairman of the bank’s compensation committee, said in a letter to shareholders. “It has been our aim to ensure that executive compensation is closely linked to corporate performance.”
Julius Baer is revising compensation after opposition to excessive pay stiffened among the Swiss following the government bailout of UBS AG, Switzerland’s biggest bank, in 2008 and a plan -- later scrapped -- by Novartis AG to pay departing Chairman Daniel Vasella as much as $78 million.
Switzerland is home to at least five of Europe’s 20 best-paid CEOs, data compiled by Bloomberg show.
Julius Baer shares sank 3.1 percent to 39.93 francs by 1:34 p.m. in Swiss trading, trimming the gain over the past 12 months to 12 percent. The Bloomberg Europe 500 Banks and Financial Services Index dropped 2.8 percent today.
“While the changes bring welcome clarity to the bank’s compensation structure, in this industry the competition is so great you have to pay to maintain the best people,” said Alevizos Alevizakos, a London-based analyst with Mediobanca SpA. “Stripping out the 2012 integration award, the CEO’s total remuneration is about the same.”
Julius Baer said in April it planned to take measures on executive pay to win over its investors after 64 percent of shareholders rebuffed Collardi’s 2012 pay in a non-binding vote. Last March, Swiss voters approved a project known as the fat-cat initiative that gave company shareholders a binding vote on managers’ pay and blocked golden handshakes and severance packages.
Swiss voters rejected a separate proposal to limit executives’ pay to 12 times that of junior employees in November, a measure that would have gone further than any other developed nation.
Julius Baer said it’s implementing closer links between pay and performance, aligning the mixture of compensation methods with “prevailing market practices” and capping bonuses. The total management variable compensation for 2013 won’t exceed four times the sum of their base salaries and the company plans additional caps for 2014, according to the report.
Bonuses will be linked to an “adjusted net profit” figure, which doesn’t include certain one-time gains and losses, the company said.
Julius Baer has said it’s expecting to pay a fine to settle a U.S. probe of Swiss banks that helped Americans hide money from the Internal Revenue Service. The bank is negotiating with the Department of Justice and is looking to resolve the matter this year, Collardi said in a Bloomberg Television interview last week.
Honorary Chairman Raymond Baer, who stepped down from the board of directors in April 2012 to head a special committee coordinating the bank’s efforts to conclude the 2 1/2-year probe, earned total compensation, including pension fund contributions, of 317,394 francs. Chairman of the board Sauter’s pay was 1.1 million francs.
Julius Baer canceled a program of financial awards linked to integrating non-U.S. Merrill Lynch wealth units acquired from Bank of America in 2012. Transferring Merrill Lynch clients and the profitability of units being absorbed were, however, among criteria for executive variable compensation in 2013.
The company said in February it expects the purchase will add client assets toward the lower end of a target range of 57 billion francs to 72 billion francs, after 40 billion francs were booked and paid for last year.
Julius Baer will have spare capital of 150 million francs to 250 million francs that could be used to make acquisitions, or to introduce a special dividend or a share buyback program after the transaction is completed, Collardi said in the television interview.
Julius Baer plans to hold its annual shareholder meeting on April 9.