SWITZERLAND - Swiss pension fund shareholders have been granted a degree of say over executive pay at banking group UBS.
It follows a shareholder resolution filed by the Swiss pension fund-owned asset manager Ethos, together with eight Swiss pension funds.
Announcing its new compensation model today, UBS said in future it will put its remuneration policy to the vote of shareholders, while implementing a simplified remuneration system.
Simultaneously, the variable part of the remuneration will be based on a bonus/malus system - meaning that if UBS' results are poor, "a negative award, or malus, can result and the bonus account will decline" - while the new system will be conditional on achieving risk-adjusted performance targets, to be tested on several years.
Ethos said it commended UBS for its decision to put decisions on executive pay to the vote of shareholders, but added it "regrets that the new system does not set a limit to the variable part of remuneration", by for instance capping the bonus in terms of base salary.
At the end of September, Ethos and eight pension funds, among which Aargauische Pensionskasse and the pension fund of the city of Zurich, submitted a shareholder resolution at UBS, ABB, Credit Suisse Group, Nestlé and Novartis, requesting an amendment of the articles of association to give the shareholders the competency to cast an advisory vote on the remuneration report.
Ethos commented today UBS is the first among the said companies to voluntarily accept to confer rights to the shareholders regrind executive pay.
UBS' new, simplified remuneration system which will consist of a fixed base salary, a cash bonus-malus system and a long term incentive plan in shares.
The shares granted under the new Long term incentive plan will vest conditional upon the achievement of long term risk-adjusted performance targets.
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