UBS sticks with salary stance
Weeks after Fairfield County found itself at the epicenter of the debate over executive pay, one of the region”™s largest employers reportedly affirmed it will continue paying what the market demands to attract the best talent.
UBS AG, which at last report had more than 4,000 workers at its Stamford offices, pledged to keep its compensation packages competitive with other financial companies, according to a memo attributed to new CEO Oswald Gruebel obtained by Bloomberg News.
New York City-based Morgan Stanley likewise said it would boost base salaries to reduce reliance by some employees on their year-end bonuses.
The companies”™ declarations follow criticism over New York City-based American International Group Inc.”™s award of multimillion-dollar bonuses, prompting outrage nationally and prompting picketing at AIG executives”™ homes locally and at a Wilton office.
Like AIG, UBS accepted a massive bailout from its federal government in Switzerland. To cut attrition in its investment banking ranks, UBS plans to boost salaries by half according to Bloomberg News, which cited three unnamed sources.
 “We have to pay our employees in line with the market,” Gruebel said in an internal memo obtained by Bloomberg News. “We will stick to this stance, even if it is criticized in the emotional debate over salaries.”
The UBS decision comes even as U.S. analysts debate how best to structure pay at banks and other financial institutions on which the economy”™s normal functioning depends. With compensation often the result of stock and options pegged to a bank”™s equity performance, some hope to see a shift to tying compensation either to a bank”™s total assets or to the credit ratings that assess a bank”™s prospects for repaying loans it takes on.
In a survey released last month, Watson Wyatt Worldwide found that two thirds of corporate directors polled are not concerned ”“ or only slightly so ”“ over the retention of top executives, and 63 percent indicated they feel companies should adapt their executive compensation to the economic realities facing the nation.
“For incentive pay programs to be effective, they must be motivational and reward executives well for delivering strong performances,” Andrew Goldstein, co-leader of executive compensation consulting at Watson Wyatt, said in a statement. “At the same time, compensation programs must satisfy shareholders by safeguarding against misaligned incentives, pay for failure and excessive risk taking.”
Nearly a third of chief financial officers surveyed by Florham Park, N.J.-based Financial Executives International (FEI) said they did not receive a salary increase this year, twice as many as a year ago. Nearly 350 CFOs at privately held companies reported having an average salary of $258,000. Their counterparts at more than 120 public companies made $410,000 on average.
In a separate survey, half of CFOs surveyed said their companies were instituting salary freezes in an effort to avoid laying off workers; nearly 30 percent were eliminating bonuses; and 20 percent were cutting salaries in some positions.