 In the press release announcing the proposed appointment of its new Chairman (1 April 2008), the UBS Board stated that it is now thoroughly examining governance, strategy implementation, risk management, monitoring and control systems, incentive plans and succession planning.
This broad review indicates that they perceive serious weaknesses across the company. Yet, it was the Directors themselves who oversaw the deterioration in these areas for which they are specifically accountable to the owners. Shareholders must question whether the nine external directors have earned their average compensation of US$ 1 million each for their contribution in 2007. “The result has been a botched succession” - Financial Times (1 April 2008) Following the further losses in the first quarter of 2008, it became apparent that Marcel Ospel would not be successful in his stand for re-election as UBS Chairman at the Annual General Meeting. In the end the Board had to rely on an internal candidate, Peter Kurer, the Group General Counsel. “Peter Kurer has a long and distinguished career as a lawyer in private practice and manager of a large legal and compliance function”, said the press release. Without any real knowledge of Mr Kurer’s skills, one is still reminded of Prince Alwaleed’s answer to a question, in a Fortune Magazine interview, about whether he had anyone in mind to succeed Chuck Prince at Citigroup. The Prince, a major shareholder in Citigroup responded, “Frankly speaking, I don't have anybody in mind…. The selection process has to be very careful and they should take their time finding the right guy. My recommendation and advice for them is they don't hire anyone unless this guy has expertise in banking. I told them, next time no lawyer, please.” Again, it is the full Board of Directors, especially those members on the bank's Nomination Committee, who should be held accountable for the "botched" succession. The Charter for the Group's Nomination Committee clearly states that it is responsible for the timely assessing of whether or not Board members, whose term of office is expiring, shall be proposed for re-election at the AGM. Surely the committee members, after seeing the extreme dissatisfaction of shareholders over the last six months, should have seen the writing on the wall and encouraged the Marcel Ospel not to stand for re-election.
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