At the AGM of UBS on 3 May 2012, Ethos recommends to oppose the remuneration report, as well as the increase in conditional capital for the employees. The total (as well as the variable) remuneration of executives is too high.
Ethos also considers that the sign-on bonus of CHF 4 million of the new chairman of the board, Dr. Axel Weber, sends the wrong signal. Finally, the loss of nearly CHF 2 billion in the investment bank prompts Ethos not to grant discharge to the board.
The Ethos Foundation urges shareholders to exercise their voting rights at the 3 May 2012 AGM in order to send a signal to the board of directors regarding the remuneration system and the inadequate system of internal control.
Opposition to the Remuneration Report
The remuneration of executive management is too high and not capped. The highest paid executive member in 2011, Mr. Robert McCann, received CHF 9.2 million, of which 85% is variable. The other members of the management received on average CHF 5.7 million, of which 70% is variable. Moreover, the sign-on bonus of the new chairman, Dr. Axel Weber, is not justified and therefore unacceptable.
Despite more than 30% opposition to the remuneration report in 2011, the board did not significantly amend the remuneration system, which prompts Ethos to oppose the remuneration report once more in 2012.
Excessive Conditional Capital for the Employees
The board proposes to double the conditional capital intended to cover the share grants to the employees. Upon approval, the conditional capital will correspond to 7.8% of issued capital which can entail significant dilution for shareholders.
In 2011, UBS granted 2% of the share capital to 6600 employees (only 10% of its total workforce). During the last three years, 8.4% of the capital was distributed to the employees in the form of shares. These figures reflect excessive variable remuneration.
Following unauthorised trading, UBS' investment bank lost CHF 1.8 billion in September 2011. This is due to material weaknesses in the internal control system that were confirmed by the executive management of UBS as well as the external auditor. In addition, the management of UBS considered UBS' internal control over financial reporting as ineffective as of 31 December 2011. In light of all this, Ethos considers that the board should not be discharged.
Ethos' Voting Recommendations:
- OPPOSE Item 1.2: Remuneration Report
- OPPOSE Item 3: Discharge the Board and Executive Management
- OPPOSE Item 5: Create Conditional Capital for the Employees
- FOR All Other Items on the Agenda