Despite a major trading scandal and huge profit losses last year, UBS AG (NYSE:UBS) executives still received significant compensation albeit declining bonuses.
According to the bank, after a net income drop of 45 percent, bonuses for the investment bank were down 60 percent from 2010, while bonuses for the overall organization declined 40 percent. In addition, some previously-awarded bonuses will be clawed back, requiring a partial forfeiture of bonus compensation that is doled out over an extended period.
The clawbacks are largely due to the $2.3 million rogue trading losses that occurred in September of last year. According to UBS, employees who are responsible for risk-taking decisions, group managing directors, or those whose 2010 bonus exceeded $2 million will be subject to a 50 percent forfeiture of the first installment in their Senior Executive Equity Ownership Plan, which would have vested this month.
The head of Wealth Management Americas, Robert J. McCann was the highest-paid member of the executive board in 2011, receiving 9.18 million Swiss francs ($9.9 million). Sergio Ermotti, who took over as CEO after Oswald Gruebel’s resignation amidst the trading scandal, received 6.35 million francs. Gruebel was paid 2.23 million francs in 2011 and waived his rights to any bonus compensation from his tenure as CEO.
Chairman Kaspar Villiger was the highest-paid member of the board of directors, with compensation totaling 1.49 million francs. Villiger plans to step down in May. The 12 members of the executive board received a total of 70.1 million francs in 2011, a decline from the 91 million francs paid to 13 board members in 2010.
In 2011, UBS dropped 28 percent in Zurich trading. In a letter to shareholders, Villiger and Ermotti said that 2012 will be, “a year of transition for the investment bank as we continue the progress of reducing risk-weighted assets and reshaping the business to ensure its future success”.
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