“It’s strange…”

Posted by Marc Hodak on March 16, 2010 under Executive compensation, Reporting on pay | 2 Comments to Read

UBS is once again paying competitive levels of compensation to try to stanch its exodus of talent, and replace it with similar talent.  Their top-earner last year, pulling down $12 million, was their co-head of investment banking Carsten Kengeter.  UBS lured him from Goldman Sachs in 2008, and his division narrowed its losses in 2009 by about $25 billion, and is now on a path to profitability.  One might think it not unreasonable that his bosses could judge that he made a $12 million difference.  But the people who are paid to carp at other people’s pay had another view:

“It’s strange that only more than a year after UBS’s biggest crisis, the bank is once again paying huge bonuses in an area that caused the most trouble,” said Roby Tschopp, director of Swiss activist group Actares. “It shows that under Chairman [Kaspar] Villiger, the bank has lost its sense to act in the interest of the people.”

The latter comment lays bare the difference in mission.  UBS’s top management, assumed by the press and critics to be looking for ways to pad the pockets of management, is acting remarkably as if it cares about the bank and its shareholders.  The “Swiss activist” organization that is advising shareholders wants the bank to act “in the interests of the people,” as if those interest are somehow served by a bank that suffers for lack of competitiveness.

As usual, the press ignores or glosses over this difference between the managers and the critics.  It swallows whole the activist’s premise that the board and managers are working against the shareholders’ interests, and that those interests would be much better served if their managers were paid what the activists think they should be paid or, better yet, if their pay were put up to a popular vote.