By Brenna Hughes Neghaiwi
ZURICH (Reuters) – UBS Chief Executive Sergio Ermotti, one of Europe’s best paid bankers, earned 12.5 million francs in 2019, down from 14.1 million in 2018 after the bank was hit with a multi-billion-euro court case and it missed earnings goals.
The world’s biggest wealth manager for the rich revealed on Friday an executive team, currently numbering 13, were handed cash, bonus and shares worth 110 million francs ($113 million) during the year.
The amount includes an 8.2 million francs one-off award for its most high-profile hire of the year, the new wealth management co-head Iqbal Khan, who was given the sweetener on top of his salary to compensate him for lost benefits after moving from rival Credit Suisse.
The total payouts are substantially larger than those made in 2018 of almost 101 million francs, although the headcount of top management grew during that time. Performance-related awards fell 14% per executive.
Top managers have in addition been given loans by the bank of more than 30 million francs, the company said.
UBS is under pressure following a conviction in France for helping wealthy clients evade taxes. The bank denies wrongdoing and is appealing against the ruling that it should pay 4.5 billion euros in penalties. A court appeal is set for June.
Last year, shareholders at the bank’s annual meeting showed their frustration by refusing to endorse the performance of the bank’s leadership, in a non-binding vote.
Investor proxy advisers also criticised high management pay, given the bank’s recent lacklustre performance. Investors will gather again at the annual meeting on April 29.
On Friday, the Swiss wealth manager unveiled an amended executive bonus system, taking into account the French tax case, as well as its shareholder and capital returns.
Payout of 1.5 million francs of Ermotti’s 2019 bonus and 7.3 million of overall executive bonuses would be contingent on the outcome of the French court case, the bank said, while further payout for senior managers would rest on achieving returns for shareholders and on capital over three years.
Ermotti is due to be replaced by ING head Ralph Hamers in November. Along with Roche boss Severin Schwan, Ermotti counts amongst Switzerland’s highest paid CEOs and one of Europe’s highest paid bankers.
The former Merrill Lynch investment banker, who has led Switzerland’s biggest bank since 2011, earned plaudits for rebuilding it after a bailout during the financial crisis and a dispute over U.S. tax cheats which tore down Swiss bank secrecy.
But UBS missed its profit and cost targets for 2019 and Ermotti pared back some of the bank’s financial goals.
Its share price has halved since a high of 22.5 francs in mid-2015, currently trading at a level last seen in 2012.
“While we are disappointed with our share price performance, we believe the share price movement in 2019 was significantly impacted by the outcome of the French cross-border matter and does not reflect the significant progress made,” the head of the board’s compensation committee, Julie Richardson, said in a letter.
(Reporting by Brenna Hughes Neghaiwi; editing by John O’Donnell and Elaine Hardcastle)