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Clumsy. This is the ruling in many places regarding the salary of UBS CEO Sergio Ermotti (63). Many compensation experts don’t even want to be quoted on this subject; When the head of the last major Swiss bank accepts such a generous salary, emotions run high in the land of modesty.
Ermotti raised 14.4 million francs last year. This makes him one of the top earners not only in Switzerland but also in Europe. In Switzerland, Novartis CEO Vas Narasimhan, 47, earned even more last year, with 16.2 million francs. ABB boss Björn Rosengren (65) is also among the top earners with 15.95 million (including long-term bonuses). However, it is worth noting that, unlike Ermotti, who took over the CEO position in March with the acquisition of CS, you have been chairman of the board for the entire year. Narasimhan’s double-digit million salary was also met with criticism.
Fees are subject to conditions
“Compared to the Swiss market, Ermotti’s salary is definitely high,” says compensation expert Timon Forrer (42) of the consulting firm Kienbaum. But you have to put things in perspective: “A large portion of salary is tied to long-term success goals. If he misses it, at least some of the payment currently reported will never be paid to Ermotti.”
Forrer also contradicts the widely held view that managers tend to take high risks when the variable pay component is high. “This may be the case for traders in the financial sector, but at the CEO level compensation packages are regularly adapted to encourage sustainable, long-term action and are linked to compliance.”
Wall Street bankers earn even more
International comparisons are often used as an argument for high bonuses in the millions of dollars: Ermotti outperforms other Swiss managers, while wages in the US are much higher. James Gorman (65), CEO of US investment bank Morgan Stanley, is considered the highest-paid banker on Wall Street with an annual salary of $ 37 million.
Compensation expert Forrer says that although Ermotti is headquartered on Bahnhofstrasse and not Wall Street, international comparison cannot be ignored. “Bank executives’ desire to be mobile is at a maximum; Ermotti can also move to the US or Singapore for work.” UBS needs to compete with these financial centers.
Switzerland was also included in the bonus fight
Forrer does not want to make a final judgment on whether the wages are suitable for the Swiss. Just this much: “It is now absolutely incomprehensible to mortals.” With such high salaries, companies also face a certain reputational risk. UBS is probably aware of this.
An example of this was seen in Switzerland during the Corona crisis: in the spring of 2020, Switzerland paid bonuses for the successful 2019 financial year – but at the same time it was already dependent on the state to survive the pandemic. This may be mathematically correct, but it is not understandable to the public.
There is a big reaction from politicians this year too. Because this time government money is involved: the takeover of CS is secured – temporarily – by billions of dollars in guarantees from the federal government. It also becomes a minor issue that UBS doesn’t have to resort to these guarantees.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
