Ethos cannot approve the remuneration report of UBS at the 14 April 2010 General Meeting, given important shortcomings of the remuneration system which was approved by the shareholders in 2009, but which the Board subsequently modified. In addition, Ethos recommends that shareholders oppose the discharge of the board members and executive management who are responsible for the bank's enormous losses over the past few years.
Finally, Ethos will also oppose the election of Wolfgang Mayrhuber, CEO of Lufthansa, who already holds four mandates in large listed companies in Germany and the USA.
A new executive remuneration system entered into force in 2009. The system was presented to the shareholders and submitted to the vote at the 2009 general meeting. The Board of Directors introduced discretionary changes to the executive remuneration system after approval by the shareholders in 2009. A second share incentive plan was added alongside the short and long-term incentive plans. This additional plan guarantees a minimum payout regardless of the achieved level of performance. Furthermore, the bonus plan was made less stringent, allowing an immediate cash payout of 60% of the award, up from 33% as outlined in the 2009 remuneration system.
Overall, past lessons regarding the remuneration system have not been learnt. For example, the highest paid member of executive management, the co-CEO of the Investment Bank in the US, received a total remuneration of CHF 13.2 million, of which 95% is variable. This corresponds to a base salary of CHF 680'000 and CHF 12.5 million in variable remuneration including bonus and long term incentives, while his division posted a CHF 6 billion loss. This practice illustrates the shortfalls of the current remuneration system.
In light of the above, Ethos recommends that shareholders oppose the remuneration report.
Oppose the discharge
UBS has decided to request shareholders to discharge the Board and executive management for their management of the Bank. In light of the Board's heavy responsibility for the enormous losses realised in recent years and the ongoing sensitive tax issues with the USA as well as the Board's decision not to file claims against former executives, Ethos recommends that shareholders do not grant the discharge for the years 2007, 2008 and 2009.
Oppose the election of Wolfgang Mayrhuber
Ethos will oppose the election to the Board of Wolfgang Mayrhuber, CEO of Deutsche Lufthansa, as he already holds four directorships in large listed companies in Germany and the USA: BMW, Munich Re, Fraport and Heico Corp.
