Wuffli Out at UBS

The UBS press

release announcing "senior executive management changes" (aka

the firing of CEO Peter Wuffli) is a classic of the raises-more-questions-than-it-answers


The news stories generally just recycle the press release, with some of them

adding in some color about the recent travails of the UBS investment bank. But

there’s a whole bunch of things here which don’t make a lot of sense and which

a troubled investment bank can’t necessarily explain.

For one thing, just how effective a chairman of the board is Marcel

Ospel? Here’s the language of the press release:

A year ago, as part of UBS’s systematic management succession planning, Marcel

Ospel expressed a wish to initiate a generational change of management at

UBS and therefore retire from his function within the foreseeable future.

He also proposed that Peter Wuffli be nominated his successor. After careful

evaluation, the Board of Directors decided not to accept his proposal. It

does not view the succession of the CEO to the position of Chairman as automatic.

Instead, the Board identifies independently the composition of the leadership

team which, in its opinion, suits the bank the best. In this context, it asked

Marcel Ospel to serve for at least another term of three years as Chairman

of the Board of Directors.

The Board of Directors and Peter Wuffli therefore decided to institute generational

change only in UBS’s operational management. Peter Wuffli will transfer all

his functions, effective immediately, to Marcel Rohner, his deputy.

There are three big questions here. Firstly, if UBS has "systematic management

succession planning," what on earth is the CEO doing relinquishing all

his duties overnight in what is clearly a surprise announcement?

Secondly, if the board of directors holds its chairman in so little regard

that it is happy to overrule him on something as big as this, why do they want

him to serve for another three-year term?

And thirdly, is firing a 49-year-old CEO really the best way to "institute

generational change"?

It’s also worth noting that UBS stock hit an all-time high at the end of April.

The company might not be a massive outperformer, but it’s definitely doing a

lot better than, say, Citigroup.

I’m unconvinced by all the stories drawing a direct causal relationship between

the failure

of John Costas‘s Dillon Read Capital Management, on the one

hand, and the ouster of Peter Wuffli, on the other. The Costas debacle might

have meant a bit of egg on Wuffli’s face, but not enough for an outright firing.

So I suppose we’ll just have to wait a bit longer for the full story.

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