Ermotti's salary could break the limit Nobody at UBS wants to talk about this figure - now even bankers are getting nervous
UBS will soon announce the salary of its CEO Sergio Ermotti for 2024. This could trigger renewed discussions about executive pay. Ermotti's remuneration is at the center of the debate.
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- Sergio Ermotti could receive over CHF 20 million in salary for his work as CEO of UBS in 2024.
- The 64-year-old's remuneration is based, among other things, on UBS's share price.
- The public has been criticizing manager salaries of this amount for years. The Council of States wants to limit bank salaries to CHF 3 to 5 million.
- Another controversial issue is that UBS has a de facto state guarantee, meaning that it would be bailed out with taxpayers' money in an emergency.
- Ermotti's salary will be published in the annual report on March 17. At the UBS Annual General Meeting on April 10, shareholders will decide whether to approve the management's remuneration.
On March 17, it will be revealed how much UBS CEO Sergio Ermotti will earn for his services in 2024.
His salary in the previous year already sparked debate: CHF 14.4 million - for nine months of work, as Ermotti has only been on the payroll of the only remaining major Swiss bank since the takeover of CS.
The NZZ expects the Ticino native's salary for 2024 to exceed the CHF 20 million mark. The next uproar seems inevitable.
Public has no understanding for huge salaries
Finance Minister Karin Keller-Sutter has already expressed her incomprehension at the high sums that certain top managers are being paid and stated that there is a disconnect between the economy and the population. The Council of States responded with a motion to limit bank salaries to CHF 3 to 5 million in future.
The announcement of Ermotti's salary could further damage the public perception of UBS. After the takeover of Credit Suisse, the bank went from being a savior of the financial center to a potential problem for the country.
UBS Chairman Colm Kelleher admitted in "Blick" that the mood changed "like a light switch" when the CEO's salary was published in spring 2024.
Even the business-friendly "NZZ" judged that a CEO salary of "rip-off dimensions" at a bank that would probably once again enjoy state guarantees in an emergency would harm its own interests.
The debate about executive pay is not new in this country. The popular initiative "against rip-offs" was adopted back in 2013. Nevertheless, other CEOs such as Vas Narasimhan from Novartis and André Krause from Sunrise have also recently made headlines with high salaries.
Ermotti's salary depends on the value of UBS shares
UBS has increased the upper limit for the share component of Sergio Ermotti's variable remuneration. This could result in his salary exceeding CHF 20 million if he makes an "excellent contribution" to the company's success.
The UBS CEO's remuneration consists of a basic salary, an annual bonus, a share bonus and a long-term capital bonus.
The actual payout depends on the performance of the UBS share price. The shareholder representative Vincent Kaufmann of Ethos warns that the realized compensation could be higher than the reported amount. UBS emphasizes that 80 percent of the variable compensation is deferred and linked to the bank's sustainable performance.
Finance professor Rüdiger Fahlenbrach explains that performance-linked remuneration should encourage CEOs to pursue projects with a good risk-return profile. The DCCP long-term bonus, which is paid out in five years, is also intended to help reduce risk.
Axel May from HCM International says that the remuneration philosophy of banks is different. UBS also has to assert itself internationally in order not to lose top talent. American CEOs often earn significantly more than their European colleagues.
The shareholders have the final say
The Chairman of the Board of Directors, Colm Kelleher, will ultimately decide how high Sergio Ermotti's salary for 2024 will be. Shareholders must approve this together with the remuneration report.
The vote will take place at the UBS Annual General Meeting on April 10 in Lucerne - a good three weeks after the million-euro salary became known with the annual report and was subsequently widely discussed.
Nevertheless, it would be a surprise if the owners of UBS were to reject their CEO's salary.
The editor wrote this article with the help of AI.
