UBS Group AG (USA) (NYSE:UBS) stated that it would allow its shareholder to vote on the annual compensation of its directors and top executives at the annual general meeting (AGM) in May.
The Bank previously held advisory votes by shareholders on the compensation of its executives; however this is the first time shareholders are being asked directly for their approval.
The Swiss government passed a law in 2014, intending to limit the compensation paid out to executives by companies listed in Switzerland. The law now makes it compulsory for companies to hold a vote on pay and the voting must take place by the second AGM after the enactment of the law.
The legal development means that UBS will have to convince the shareholders on the amount of Bonus given to executives and to link compensation based on performance.
The vote by the AGM will be binding and is in line, with the ‘fat cat’ initiative passed last year by Swiss voters.
According to UBS, the shareholders will be asked to vote on the variable compensation, especially annual bonuses of the member of the Executive board, including Sergio P. Ermotti, the Chief Executive Officer of UBS.
The investors will also vote on the base salaries of executives for the FY2016 and the compensation of the board of directors in 2015.
The board of directors back the prospective voting on maximum fixed compensation for the Executive Board as it believes that the move will bring “certainty needed to operate effectively.”
The news release further noted that the shareholders’ vote on the aggregate variable compensation for the G.E.B. relative to the previous years. This, UBS claims, will give the shareholders knowledge to make better decisions on compensation. The method will help shareholders make an informed decision on performance-based compensation, the news added.
Sergio Ermotti, the CEO of UBS Group AG (USA) (NYSE:UBS), is set to receive 11.2 million Swiss francs, for 2014, up from $10.7 million Swiss francs last year. The figure included bonus and other variable compensation of $8.4 million.