Former UBS executives forgo bonuses

26 November 2008

ZURICH – Three former top executives who oversaw massive subprime losses at Swiss banking giant UBS AG said Tuesday they are forgoing CHF 33 million in salary and other payments.

Ex-Chairman Marcel Ospel, who was in charge as the bank ran up more than USD 40 billion (CHF 47.7 billion) in writedowns and losses over the past year, is forfeiting more than two-thirds of the renounced payments, a statement said.

Two other members of the governing troika, ex-Vice President Stephan Haeringer and former Chief Financial Officer Marco Suter, are also taking part in the gesture.

The bank confirmed that the trio was giving up the amount.

"We welcome this decision and thank them for it," UBS said.

The three said they "want to make it clear that they are facing up to reality. The move to forfeit the remuneration is entirely voluntary and should in no way be construed as an admission of guilt in a legal sense."

"With the involvement of the Swiss government, I realised that decisive action was required on my part," Ospel said in the statement, referring to a near USD 60 billion state bailout package for UBS in October.

"I hope that my action will help to resolve a situation that was inconceivable to me until a short time ago."

The statement quoted Haering and Suter as saying that "as executive board members we helped shape the strategy of UBS over the years. From the start there was no question that in this difficult situation we would express solidarity to each other and be loyal to UBS."

The move by the three follows the disclosure by former Chief Executive Peter Wuffli, who left the bank in July 2007, that he had renounced CHF 12 million he was to receive.

The bank has said it would disclose what the former executives would do about their pay at a special shareholders’ meeting Thursday.

Last week UBS said it will stop making bonus payments to its chairman starting next year. Peter Kurer, who has already said he will forgo any bonus for 2007 and 2008 until the bank has recovered, will receive a fixed salary starting in 2009, the bank said.

The bank will also introduce what it calls a "bonus-malus" system for its other 12 board members. No bonus will be awarded in years when UBS achieves a loss, and the cash balance will be reduced by a "malus," the opposite of a bonus.

Board members’ bonuses will be held back for a certain period to discourage risky short-term investments, the bank said, adding that it would also apply the system to other senior managers in charge of high-risk parts of its business.

UBS shares rose 8.35 percent Tuesday to CHF 14.93 on the Zurich exchange.

[AP / Expatica]