Ethos recommends that the UBS general meeting rejects the remuneration, the share buyback programme and the sustainability report. The remuneration of UBS's executive bodies is too high compared to other European financial institutions and a significant part of the variable remuneration can have an important leverage effect. As a long-term shareholder, Ethos is also committed to strengthening the bank's capital base and therefore recommends that shareholders oppose the new share buyback programme. Ethos also regrets that the bank is withdrawing certain sustainability commitments and recommends to vote against the sustainability report.
The level of remuneration in favour of UBS executives is too high, especially in comparison with European competitors of a similar size. Ethos recognises that UBS has not further increased the CEO's remuneration for 2024 compared to 2023. Nevertheless, the CEO's remuneration remains one of the highest salaries in Switzerland and Europe: in 2024, the CEO's total remuneration was 53 % higher than the median of the other CEOs of the ten largest companies listed in Switzerland. Compared to the remuneration of the CEOs of the twelve largest financial companies in the MSCI Europe Index, his total remuneration was 139 % above the median.
Ethos remains concerned about the possible level of variable remuneration for members of the executive management. These can amount to a maximum of seven times the basic salary. This could lead to excessive remuneration. In addition, the bank does not disclose the fair value of the long-term share allocation. As a result, the remuneration of the Executive Board for 2024 is undervalued and there is an additional leverage effect on the variable remuneration.
Ethos therefore rejects the remuneration report (advisory vote) and the remuneration proposal for the executive management and the board of directors (binding vote) at the upcoming UBS annual general meeting on 10 April 2025. The CEO of the Ethos Foundation Vincent Kaufmann states: “Remuneration at UBS is among the highest in the industry in Europe. Such high payments and the very high leverage for variable remuneration can encourage excessive risk-taking, as the 2008 financial crisis or the recent collapse of Credit Suisse have shown. Such variable remuneration is not in the interests of long-term shareholders.”
Stable capital situation: no share buybacks
UBS's remuneration system provides for two performance criteria for the long-term remuneration component, the return on core capital and the relative total shareholder return. However, the achievement of these performance targets can be mechanically influenced by the reduction in equity. Long-term oriented shareholders of UBS are interested in a stable bank with sufficient capital to overcome economic crises. Given its business model focussing on wealth management and its size in relation to the Swiss economy, the bank should therefore have a high equity base. For this reason, the level of capitalisation of the big banks is currently the subject of political debate. The size of UBS since the takeover of Credit Suisse makes a further rescue by the Swiss federal government very complicated and it is therefore essential that the bank strengthens its capital base. The proposal of the UBS board to buy back and cancel shares contradicts this objective and the current discussion. Ethos supports the strengthening of the bank's capital base through core equity and recommends that the general meeting of UBS votes against the proposed share buyback programme.
Sustainability report: UBS adjusts ambitions downwards
Ethos also recommends that UBS shareholders vote against the sustainability report. UBS has taken steps backwards compared to last year. In particular, the bank has watered down its ambitions in terms of climate change, diversity and equality as well as investment exclusion criteria.
Furthermore, there are significant gaps in the UBS sustainability report. UBS's transparency on the financed emissions in the area of asset management is insufficient and does not allow shareholders to assess the bank's contribution to climate change or measure future reductions of its impact. UBS only partially discloses the greenhouse gas emissions associated with the loans. In addition, the bank also does not publish a stringent strategy for reducing greenhouse gas emissions with quantifiable measures defined to achieve the target. Without a transparent roadmap for achieving net zero emissions by 2050, shareholders are unable to assess the credibility of the climate strategy.
