As readers of this blog know, there is often a focus on compensation culture within banks. Or rather a focus on the apparent inconsequential compensation culture of many banks. A very good example of this issue came up in a store in 5 March 2021 Financial Times report on the compensation provided to their new CEO, Ralph Hamers. As readers may recall, Mr. Hamers was already a topic in this blog on 16 December for issues related to his work at ING Bank in The Netherlands.
It appears that UBS has decided to highly compensate Mr. Hamers for his work in the last quarter of 2021. The article noted that “Ralph Hamers has been paid SFr4.2m ($4.5m) for his first four months of work, more than his entire annual earnings during his time as the head of Dutch bank ING.” But what makes this payment most interesting is that Hamers began his role at UBS on 1 September 2021 and took over as CEO on 1 November – already one month into the 4th quarter for which he was handsomely paid. The article goes on to quote the UBS annual report: “Ralph Hamers decisively led UBS as group CEO through the fourth quarter and delivered very strong results, thereby successfully completing the year and contributing to achieving the best results for UBS in a decade.”
With all due respect to Hamers who has been a very good bank manager over many years, it seems a bit unusual that he is paid so highly for results in a quarter when he was only in charge for 2 months. Furthermore, one could ask how much impact his leadership or the leadership of any bank CEO has on earnings in a quarter where they are just beginning their role. Does the UBS Compensation Committee really believe that his efforts in 2 months were so significant that such a payout is justified? Or is this just another example of why cynicism regarding compensation of bankers is justified?
