Swiss Banking giant UBS announced that 4 of its 12 directors resigned and it is taking measures to improve corporate governance in an attempt to regain the confidence of investors in the face of massive losses.
UBS will hold an extraordinary shareholder’s meeting on October 2 to have a vote on replacements for the resigning board members. The bank also intends to inform investors about the impact of the changes and attempts to limit further losses. It is expected to report a loss for the quarter ended on June 30.
“We have made a big step forward with the clear separation of the duties between the Board and Executive Management and the abolition of the Chairman’s Office.” –Peter Kurer
The governance and nominating committee has completed the overhaul of the corporate governance of the bank, UBS said in a statement, and has issued new organization regulations which are effective immediately. The main elements of the corporate governance entail a clear separation of the roles and responsibilities between the board of directors and executive management and a strengthening of the oversight role of the board through the operation of its committees.
CLICK HERE FOR A REPORT ON UBS’s WRITEDOWNS
“Bringing UBS back to its leading position was the number one priority I committed to at the Annual General Meeting of 23 April 2008″ said Chairman Peter Kurer. “We have made a big step forward with the clear separation of the duties between the Board and Executive Management and the abolition of the Chairman’s Office. Thanks to the Governance and Nominating Committee, much has been achieved in a very short time and I am pleased with our progress. We have the foundations for the energetic and rigorous execution of our mandate.”
Stephan Haeringer, Rolf Meyer, Peter Spuhler and Lawrence Weinbach have tendered their resignation effective at the EGM of 2 October 2008. The proposed new members will be announced within the required timelines before the EGM. Sergio Marchionne is appointed Senior Independent Director and continues as the Company’s non-executive Vice Chairman.
With the announcement and the publication of the new organization regulations on the company’s website today, the new UBS Corporate Governance becomes formally operational. The new model clarifies the separation of responsibilities between the Board and the Executive Management. The Board of Directors will have a clear strategy setting responsibility, and it will supervise and monitor the business. The CEO and the Group Executive Board will be fully responsible for the executive management of the bank. The duties and responsibilities of the former Chairman’s office are now allocated to a greater number of committees of the Board, including new Risk and Strategy Committees. The remits of the Governance and Nominating Committee and the Human Resources and Compensation Committee have been expanded.
The changes are based on a thorough review of international best practices in Corporate Governance, which include the establishment of the position of a Senior Independent Director. This role will be assumed by Sergio Marchionne who will continue to be the bank’s non-executive Vice Chairman. Role profiles and expectations have been clearly defined for the positions of Chairman, Vice Chairman, Senior Independent Director and Board members, including clear specification of the mandate and scope of operation of all Board Committees. It is expected that the bank will not require a full time Executive Vice Chairman.
The new Corporate Governance guidelines are published on the Company’s website. In overhauling this structure, the Board, through its Governance and Nominating Committee, has been advised by Rothschild as well as the Swiss law firm Bär & Karrer as independent advisers.
“The Governance and Nominating Committee was fully committed to renewing UBS’s Corporate Governance”, says Gabrielle Kaufmann-Kohler, Chairperson of the Committee. “We were able to elicit contributions and reviews from all members of the Board, and we are confident that the measures introduced today represent a significant step forward in reflecting international best practices in the governance regime of the bank.”