ZURICH: Shareholders of UBS were unhappy as the bank announced it had paid CEO Sergio Ermotti almost $9 million in 2012. The Swiss bank is seeking a new investment bank chief with a $26 million package, just as it is in the process of firing 10,000 staff.
Executive pay in Switzerland remains a heated issue five years after the near collapse of UBS, blamed by many on a big bonus culture driving bankers to take excessive risks.
“UBS has still not learnt from the mistakes of the past,” said Brigitta Moser-Harder, an outspoken retail shareholder of UBS who campaigned for strict controls on executive pay that were adopted in a Swiss referendum earlier this month.
Investment bank chief Andrea Orcel, who is overseeing a radical restructuring of that operation in which 2,000 jobs are expected to go, secured a package worth 25 million Swiss francs ($26.27 million), according to UBS’s annual report.
It comprises $6.364 million in deferred cash and deferred UBS shares worth 18.5 million francs ($19.44 million) at the grant date. The deferred cash and shares will vest in instalments in 2013, 2014 and 2015.
The deal was designed to replace forfeited pay from his former employer, Bank of America Merrill Lynch, after he joined the Swiss bank in July 2012. Orcel’s regular salary for 2012 was not disclosed.
Moser-Harder told Reuters that Orcel’s payment was outrageous: “Not only did the investment bank contribute a loss in the billions, it is also being massively scaled back.”
The Swiss vote two weeks ago will give shareholders a binding vote on remuneration, ban big rewards for new and departing managers and impose possible jail sentences and fines for breaches of the new rules.
Swiss drugmaker Novartis was forced to scrap a proposed $78 million payment to outgoing chairman Daniel Vasella in February after a public outcry
UBS Chairman Axel Weber, whose 4 million franc signing-on fee sparked enough shareholder anger to garner a one-third opposition to the bank’s overall pay scheme last year, earned 3.57 million francs in 2012.
The news follows another turbulent year for UBS, which posted a full-year net loss after saying it would fire 10,000 employees as it exits large parts of its fixed-income business.