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UBS to replace four board members and close Chairman's Office |
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InvestorVoice welcomes the replacement of four of the UBS board members. We have been particularly critical of the board (see "UBS where was the Board?") and of the role of Marcel Ospel's Chairmans Office. In a recent press release, UBS confirms the resignation of four members of the board and its changes to its Corporate Governance.
UBS establishes new Corporate Governance and calls an Extraordinary General Meeting to elect four new members to the Board of Directors • New Corporate Governance guidelines to come in to force immediately
• Stephan Haeringer, Rolf Meyer, Peter Spuhler and Lawrence Weinbach to resign in October 2008
• Extraordinary General Meeting (EGM) scheduled for 2 October 2008
• Nominations of the new Board members to be announced in good time before the EGM
• Sergio Marchionne to become Senior Independent Director and to continue as non-executive Vice Chairman
The Board of Directors of UBS is implementing the first measures in its program to restore UBS to its premier position among global banks, as announced at the Annual General Meeting of 23 April 2008.
The Governance and Nominating Committee has completed the overhaul of the Corporate Governance of the bank, and has issued new organization regulations which are effective immediately. The main elements of the Corporate Governance entail a clear separation of the roles and responsibilities between the Board of Directors and Executive Management and a strengthening of the oversight role of the Board through the operation of its Committees.
"Bringing UBS back to its leading position was the number one priority I committed to at the Annual General Meeting of 23 April 2008" said Chairman Peter Kurer. "We have made a big step forward with the clear separation of the duties between the Board and Executive Management and the abolition of the Chairman’s Office. Thanks to the Governance and Nominating Committee, much has been achieved in a very short time and I am pleased with our progress. We have the foundations for the energetic and rigorous execution of our mandate."
Four members of the Board of Directors have decided to resign their positions. As a result, an Extraordinary General Meeting will be held on 2 October 2008 to elect four new members. The proposed new members will be announced within the required timelines before the EGM. Sergio Marchionne is appointed Senior Independent Director and continues as the Company’s non-executive Vice Chairman.
The Board and its Strategy Committee are continuing their review of the strategic positioning of the bank and of its businesses.
New UBS Corporate GovernanceWith the announcement and the publication of the new organization regulations on the company’s website today, the new UBS Corporate Governance becomes formally operational. The new model clarifies the separation of responsibilities between the Board and the Executive Management. The Board of Directors will have a clear strategy setting responsibility, and it will supervise and monitor the business. The CEO and the Group Executive Board will be fully responsible for the executive management of the bank. The duties and responsibilities of the former Chairman’s office are now allocated to a greater number of committees of the Board, including new Risk and Strategy Committees. The remits of the Governance and Nominating Committee and the Human Resources and Compensation Committee have been expanded.
The changes are based on a thorough review of international best practices in Corporate Governance, which include the establishment of the position of a Senior Independent Director. This role will be assumed by Sergio Marchionne who will continue to be the bank’s non-executive Vice Chairman. Role profiles and expectations have been clearly defined for the positions of Chairman, Vice Chairman, Senior Independent Director and Board members, including clear specification of the mandate and scope of operation of all Board Committees. It is expected that the bank will not require a full time Executive Vice Chairman.
The new Corporate Governance guidelines are published on the Company's website. In overhauling this structure, the Board, through its Governance and Nominating Committee, has been advised by Rothschild as well as the Swiss law firm Bär & Karrer as independent advisors.
“The Governance and Nominating Committee was fully committed to renewing UBS’s Corporate Governance”, says Gabrielle Kaufmann-Kohler, Chairperson of the Committee. “We were able to elicit contributions and reviews from all members of the Board, and we are confident that the measures introduced today represent a significant step forward in reflecting international best practices in the governance regime of the bank.”
Resignation and nomination of four Board members
Stephan Haeringer, Rolf Meyer, Peter Spuhler and Lawrence Weinbach have tendered their resignation effective at the EGM of 2 October 2008.
“I thank the departing Board members for their excellent work and dedication to our institution over a number of years”, said Chairman Peter Kurer. “All of them have contributed substantially in their respective functions to the development of our bank and have provided key support in redesigning our Corporate Governance.”
The Governance and Nominating Committee has, shortly after the AGM of 23 April 2008, initiated a comprehensive search process and is now in the phase of narrowing the list of potential candidates for the Board. In order to replace the skills offered by the departing members, the majority of the candidates will have substantial banking, finance and risk backgrounds.
Extraordinary General Meeting scheduled for 2 October 2008 The UBS Board of Directors intends to call an Extraordinary General Meeting of its shareholders (EGM) to be held on 2 Resignation and nomination of four Board members
Stephan Haeringer, Rolf Meyer, Peter Spuhler and Lawrence Weinbach have tendered their resignation effective at the EGM of 2 October 2008.
“I thank the departing Board members for their excellent work and dedication to our institution over a number of years”, said Chairman Peter Kurer. “All of them have contributed substantially in their respective functions to the development of our bank and have provided key support in redesigning our Corporate Governance.”
The Governance and Nominating Committee has, shortly after the AGM of 23 April 2008, initiated a comprehensive search process and is now in the phase of narrowing the list of potential candidates for the Board. In order to replace the skills offered by the departing members, the majority of the candidates will have substantial banking, finance and risk backgrounds.
Extraordinary General Meeting scheduled for 2 October 2008 The UBS Board of Directors intends to call an Extraordinary General Meeting of its shareholders (EGM) to be held on 2
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UBS AG provides a range of financial services, including advisory services, underwriting, financing, market making, asset management, brokerage and retail banking on a global level. At 31 December 2006, UBS has over 175,000 individuals registered as Shareholders.
Latest News
27 November 2008, Lucerne, Switzerland In Lucerne, 2,395 shareholders of UBS AG attended the extraordinary general meeting held to vote on the proposed capital raising. Shareholders, generally supportive of the Chairman, Peter Kurer, still wanted the bank to pursue legal action against former executives even though a number of these executives have returned or rejected CHF 70 million in remuneration. Shareholders demanded details of payments made over the previous five years to the senior executives. They also demanded that the bank recover payments from the non-Swiss executives who have left the banks, referring to Hew Jenkins, the former head of the investment... Readmore | UBS has proposed a new compensation plan for its employees which will include an advisory vote on compensation by shareholders at each Annual General Meeting. It is also looking at legal remedies with regard to claiming back bonuses of executives who have left the company. In addition, it has established a working group to press for voluntary repayment of bonuses given to these executives. Readmore | k possResults were impacted by realized and unrealized losses of USD 4.4 billion on legacy risk positions, mainly on exposures related to US residential real estate-related securities and other credit positionsUBS continued to reduce exposures to risk positions throughout the quarter, largely through sales and to a lesser extent further writedowns. Exposures to US residential real estate-related positions were reduced by almost 50% by quarter end The transaction with the Swiss National Bank (SNB) announced on 16 October 2008 will result in a dramatic decrease of UBS's risk positionsTransaction with the Swiss National BankAs announced on 16 October 2008, the... Readmore | The Swiss government has provided UBS with SFr6bn injection of fresh capital through the purchase of a mandatory convertible note. In addition, the Swiss National Bank and UBS have reached an agreement which will enable UBS to offload transfer $60bn of illiquid assets into a separate fund entity to be controlled by the SNB. Readmore | 12 August 2008. UBS today announced a second quarter loss of CHF 358 million and plan to separate its business into three distinctive autonomous units. (see press release below)At its investor presentation, UBS stated that it had no intention to sell any of its businesses but many analysts present believe that the move would make any disposal far easier to achieve. The Chairman indicated that the Group had received approaches but stated that none of them were at a price that they would even remotely consider.UBS said there had been net new money outflows of almost CHF 44 billion in... Readmore | | Show options |
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Recent Events
1st Quaret 2008 Expected Net Loss of CHF 12 billion UBS has pe-announced its first quarter 2008 results stating that it expects a net loss of CHF 12 billion mainly due to US$ 19 billion of write-downs on its US real estate and related structured credit positions. This brings the total write-downs (2007 to first quarter 2008) to US$ 37 billion. The announcement also stated that it has undertaken a rights issue of CHF 15 billion (fully underwritten) in addition to the already agreed CHF 13 billion capital raising. The announcement also stated that the current Chairman, Marcel Ospel, will not stand for re-election at the 2008 Annual General meeting. The Board proposed the appointment of Peter Kurer as Ospel's successor. The Board stated that the appointment was part of an extensive process, which was already underway, whereby the Board is reviewing the root causes of and lessons learned from its subprime losses. In particular, the Board is thoroughly examining governance, strategy implementation, risk management, monitoring, and control systems, incentive plans and succession planning and is committed to making all necessary adaptations and changes to ensure it establishes best practices in these areas. Sub-prime Losses US$ 18 billion UBS has announced a net loss attributable to shareholders for the full year of CHF 4.384 billion. During 2007, UBS was forced to writedown its US sub-prime holdings by US$ 18 bn. The writedown was far higher than expected and has dented the Group's conservative Swiss reputation. According to its Finance Director, Marco Suter, the sub-prime losses were incurred in a few trading books which even in the past were only marginal revenue contributors. Full details were provided on 14 February 2008 when its final full year results were published. Recapitalisation At the request of UBS, the Government of Singapore Investment Corporation and an undisclosed Middle Eastern investor have agreed to buy CHF 13 billion (US$11.5 billion) of UBS mandatory convertible notes with a 9% coupon. The notes will eventually convert into approximately a 10% stake in UBS, depending on the conversion ratio used at maturity. The action was taken to strengthen its capital position. The recapitalisation will be voted on at a special shareholder's meeting in February. The Swiss National Bank has supported the recapitalisation but many individual and institutional shareholders believe the solution disadvantages current shareholders. A number of other financial institutions have approached sovereign funds for investment but most have allowed current shareholders the opportunity to invest on the same or similar terms. At the February EGM, shareholders will also be asked to approve the creation additional authorized capital to allow for the replacement of the cash dividend with a stock dividend for the current year. The Board has already approved the rededication for sale of 36.4 million Treasury Shares previously intended for cancellation. Management Changes Following on from the ealier statements on losses in the sub-prime market, UBS in October 2007 announced management changes and the loss of 1500 jobs. Mr Ospel, the UBS Chairman, had already removed Peter Wuffli, the chief executive officer. Others, including,the chief executive of the investment banking division, the group chief financial officer and the head of the fixed income business have also left. The group chief risk officer has been transferred to another role. But after UBS announced at the end of January 2008 that the total losses from the meltdown in the US sub-prime mortgage market have reached US$ 18 billion, many believe that the changes are not sufficient and that Ospel should also leave or at least announce his retirement date. If this were to happen, many believe that UBS will have a greater chance of obtaining the requested approvals to the resolutions to be put at the EGM in February. Risk Management In their letter to shareholders, included in the 2006 Annual Report, the UBS Chairman and the then current CEO, highlighted the banks approach to risk management and also their short term concern for the markets. Extract from-
Fourth Quarter 2006 Report
13 February 2007
Letter to shareholders
Our approach to risk has been critical to our current growth. UBS's average risk-weighted assets are today at a similar level to 1998, just after the UBS-SBC merger, although our underlying risk profile is very different. We are now a more integrated firm - our business model has evolved, and the way we view, manage and control our risks has changed.
The primary focus in our risk-taking activities is to ensure the adequate diversification of risk in order to avoid illiquid and concentrated positions, and to ensure that we are rewarded for the risks we take.
We have transferred resources from businesses in illiquid markets into more liquid ones, and have actively pursued risk distribution strategies. Portfolios with poor returns on risk have been cut back and the quality of other portfolios has been enhanced…….
Outlook……… In the short term, as the economic cycle matures, investors might become more sensitive to any disappointing political or economic developments, so our top-class risk control remains paramount.
With such an apparent focus on risk management and concern regarding a possible market downturn in the short term, how could things go so wrong (US$ 37 bn) in such a short period?
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