Julius Baer: Controversial Board Remuneration Package
In a recent development, Institutional Shareholder Services (ISS), a leading proxy advisory firm, has advised Julius Baer shareholders to vote against the proposed remuneration package for the Swiss private bank’s board of directors. The recommendation comes amidst controversy over a proposed doubling of the chair’s pay to 2 million Swiss francs ($2.26 million).
Background
Julius Baer, the largest Swiss private banking group, has been under scrutiny for its executive compensation practices. In 2020, the bank paid its CEO, Boris Collardi, a total compensation of CHF 8.5 million ($9.8 million), which was higher than some of its peers. This, coupled with the proposed increase in the chair’s pay, has raised concerns among shareholders and investors.
ISS Recommendation
ISS, which provides proxy research and voting recommendations to institutional investors, argued that the proposed remuneration package does not align with market practices and the bank’s peers. The firm also noted that the proposed increase in the chair’s pay is not justified given the bank’s performance and the economic uncertainty caused by the COVID-19 pandemic.
Impact on Shareholders
The recommendation from ISS could have a significant impact on Julius Baer shareholders. Institutional investors, who collectively own a large portion of the bank’s shares, often follow the advice of proxy advisory firms like ISS when making voting decisions. If a large number of shareholders vote against the proposed remuneration package, it could lead to a failure of the resolution at the upcoming annual general meeting (AGM).
Impact on the Bank
A failure of the proposed remuneration package at the AGM could send a negative signal to the market and potentially impact the bank’s reputation. It could also lead to increased pressure on the board to reconsider its compensation practices and potentially lead to a revision of the proposed pay increase.
Global Implications
The controversy surrounding Julius Baer’s proposed remuneration package is not an isolated incident. Executive compensation has been a contentious issue in the financial industry for several years. The increasing gap between executive pay and employee pay, as well as the perceived lack of alignment between executive compensation and performance, has led to growing scrutiny from shareholders, regulators, and the public.
The recommendation from ISS is a reminder of the importance of transparency and alignment in executive compensation practices. It also highlights the role of proxy advisory firms in shaping corporate governance and the need for shareholders to engage with companies on these issues.
Conclusion
The recommendation from Institutional Shareholder Services for Julius Baer shareholders to reject the proposed remuneration package for the bank’s board of directors is a significant development. The controversy surrounding executive compensation practices in the financial industry is not new, but the growing scrutiny from shareholders and regulators is a reminder of the importance of transparency and alignment in these practices. As investors and shareholders, it is essential to engage with companies on these issues and to use our voting power to promote good corporate governance.
- Institutional Shareholder Services has advised Julius Baer shareholders to reject the proposed remuneration package for the bank’s board of directors.
- The recommendation comes amidst controversy over a proposed doubling of the chair’s pay to 2 million Swiss francs ($2.26 million).
- The controversy could lead to a failure of the resolution at the upcoming AGM if a large number of shareholders vote against it.
- The issue highlights the importance of transparency and alignment in executive compensation practices.
- Proxy advisory firms play a significant role in shaping corporate governance and promoting good practices.
