If you talk to banking headhunters in London about the recent bonus round at UBS they will tell you that people there aren’t super-happy, that generally speaking it was “not good” and there is a degree of discontentment. Today’s compensation report from the Swiss bank begs the question as to why.
As the chart below shows, UBS didn’t just pay its 707 “key risk takers” globally well, it paid them very well – salaries and bonuses for risk takers at the Swiss bank were considerably higher than at any of the other European banks to report similar figures so far. It also paid them more than last year. Total compensation (salary and bonus) for the average material risk taker at UBS in 2016 was $1,810,538. In 2017, it was $1,970,100.
Of course, key risk takers aren’t everyone. 45,664 people at UBS globally received a bonus last year. Key risk takers are a tiny subset of them,and are mostly in London: 623 of the 707 work at UBS’s office in Broadgate.
UBS defines them as, “employees who, by the nature of their roles, have been determined to materially set, commit or control significant amounts of the firm’s resources and / or exert significant influence over its risk profile.” They include important people in front office, control, and “logistics” functions, plus anyone earning in excess of CHF2.5m ($2.63m/ £1.9m).
It’s not just the level of absolute compensation that should be cause for celebration in the key risk taker ranks at UBS this year. The Swiss bank also raised its cap on cash bonuses from CHF1m to CHF2m: people are getting more money, more quickly.
There are still downsides. UBS boasts that its 3.5 year average vesting schedule for deferred bonuses is one of the longest in the industry. In 2017 it also paid a fifth of its bonuses under its “Deferred Contingent Capital Plan (DCCP),” whereby they’re fully withheld until 2022.