I thought about this in early March, when I read that Andrea Orcel, the head of UBS’s investment bank, had received a SFr25 million ($26.4 million) package when he joined the Swiss bank from Bank of America. The headline number has prompted a sharp intake of breath from many commentators, shareholders and employees.
This criticism is only partly justified. Orcel’s deal was a buyout of the package he would have received had he stayed with his former employer. It is broken down into SFr6.4 million of deferred cash and 1.76 million UBS shares (worth approximately SFr18.5 million at the date he joined). Orcel, as one of the best dealmakers in the market, is an excellent negotiator, whether for his clients or himself. Any bank that wanted to hire him would have had to pay this price. And I have heard whispers that other banks baulked at this.
For those who grumble, I would point out that since Orcel joined the firm, UBS’s shares are up some 35%, largely because of the drastic restructuring plan he devised with his former Merrill Lynch colleague and current UBS chief executive, Sergio Ermotti.
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So shareholders might do well to quell their cavilling.