UBS boosts compensation for CEO, staff as profit rises

Bloomberg

UBS Group AG boosted Chief Executive Officer Sergio Ermotti’s pay and increased the bank’s bonus pool by about 6 percent after underlying profit rose.
The Zurich-based lender boosted the bonus pool for 2017 to 3.1 billion Swiss francs ($3.3 billion), according to its annual report. Ermotti remains the highest-paid executive, earning 14.2 million francs, up from the 13.7 million francs he received in 2016. That includes 11.4 million francs in variable compensation.
UBS Group AG’s investment bank allocated the biggest discretionary payouts to the highest revenue generators and younger employees as competition from other industries intensifies, people with knowledge of the matter said last month. Andrea Orcel, head of UBS’s investment bank, said in an interview in December that 2017 would be a “tricky year” for compensation in the industry, but that his company had done slightly better than a year earlier.
“We delivered excellent financial results, maintained our strong capital position and achieved our net cost reduction target in 2017,” the bank said in the report. The previous year, the Swiss lender handed out the smallest bonuses in four years, awarding employees about 2.9 billion francs.
The bank’s bonus pool is tied to several performance indicators, including capital strength and some profitability measures. Ermotti late last year was involved in a heated exchange with a former Bank of England deputy governor who said bankers could cut their own pay instead of complaining about how difficult it is to make money. At a conference in London in November he said that criticizing banker pay was “very simplistic.”
In awarding Ermotti’s pay, UBS said that “overall performance exceeded plan despite significant market headwinds, including low market volatility, negative interest rate environment and high funding costs.”
UBS in January announced its first buyback since the credit crisis and laid out fresh financial targets. The lender plans to repurchase about 2 billion francs of shares over three years and committed to increasing the dividend each year, by mid-to-high single-digit percentages, compared with a previous target to return at least half of profit to shareholders providing its capital ratio remains above 13 percent.