Dear shareholders, we're pleased that you have accepted our invitation and cordial welcome to the annual general meeting of UBS Group AG here at the refurbished St. Jakobshalle in Basel. I also welcome the viewers who are following us through the Internet in either German or English. Pursuant to Article 13 of the Articles of Association of UBS Group AG, I herewith formally open the annual general meeting. I shall chair the meeting and let me present to you the participants who will support me up on the podium. Out on the left, Kirt Gardner, our Group Chief Financial Officer, then Markus Diethelm, our Group General Counsel, Sergio Ermotti, our Group CEO, and on my right, Markus Baumann, our General Secretary. I herewith appoint Markus Baumann to keep the minutes of the annual general meeting today, and I welcome the members of the board of directors.
I also welcome BDO AG of Solothurn, who will be in charge of vote counting. I would like to welcome the independent proxy, Altorfer Duss & Beilstein AG of Zurich, represented here today by Dr. Urs Zeltner, a notary of the Canton of Solothurn. Finally, I would like to welcome the representative of the auditors, Ernst & Young, in particular, the lead auditors for the 2018 financial year. The invitation for the annual general meeting today was published in the Swiss Official Gazette of Commerce on April 1st, 2019. The invitation has also been available on our webpage, and it was sent in printed form to shareholders registered in the UBS Group AG's share registers. Around 6,000 shareholders have renounced on receiving a printed invitation, including the enclosures, and have only sent the QR code to them.
This is very much in line with the idea of sustainability, and we're pleased with this development. On February 1st, 2019, we published a note in the Swiss Official Gazette of Commerce and on our website inviting our shareholders to submit additional items they wish to have discussed at the AGM by March 13th, 2019. We have not received any such request. I herewith note that the annual general meeting has been duly convened in agreement with the Articles of Association and the law, and the annual general meeting thus is qualified to pass resolutions. Let me make some housekeeping remarks regarding proceedings at the AGM. We're going to keep a list of speakers as usual. I would like to ask those shareholders who wish to take the floor on any of the items, please turn to the speakers desk on your left in the hall and sign up there.
You will then be called, one after the other, to speak on the items as they arise. Since we're going to vote on 26 items today, we shall restrict speaking time to five minutes provisionally so as to do proper time management at the AGM. Can I ask you for your understanding? There'll be clocks at the rostrum and in the control room, and you will be given a sign when your speaking time is up. At the annual general meeting today, pursuant to Article 17, Paragraph one of the Articles of Association of UBS Group AG, it is for the absolute majority of votes cast to be decisive, excluding empty and void ballots and invalid ballots. We are going to carry out votes electronically. If you wish to leave the proceedings before the end, please return your voting device at the validation desk.
If you have any questions regarding your voting device, feel free to turn to one of the two help desks on the left and right-hand sides in the hall here. Please turn to the staff there. Finally, let me point out that for the purpose of keeping the minutes, we're going to audio and video record the proceedings, and the proceedings are being broadcast live on the internet. Ladies and gentlemen, dear shareholders. Let me again welcome you very warmly to the UBS annual general meeting. I'm delighted that so many of you have returned to Basel this year, even if it's a different venue. Your visit shows how closely connected you feel to the bank. Last year was not an easy year. Most market players were still optimistic at the beginning of it. The first setback in February was quickly recouped.
In the fourth quarter, however, prices plunged dramatically, and by the end of the year, virtually all asset classes had suffered significant losses year-on-year. Nevertheless, these difficult situations, it showed very precisely that our strategy is right. We increased our net profit by 16% to $4.5 billion. By the way, the dollar is currently roughly equal to the franc. We increased our return on CET1 capital to 13.1%, and we were able to generate, in 2018, an additional $4 billion of capital. Our total loss-absorbing capacity now stands at $84 billion. These are remarkable achievements on the part of management and the employees. This puts us well ahead of our European peers and on a par with U.S. banks. Let's not forget, compared with us, the U.S. banks have the benefit of a better economic climate, higher interest rates, and a more dynamic capital market.
From this perspective, our annual performance should be viewed positively. UBS's continued good financial results demonstrate the sustainability of our strategy. You, as the owners of the bank, can be pleased just as well. We propose a further increase in the dividend. If the annual general meeting agrees, you will receive CHF 0.70 per share. We have promised that as the owners of the bank, you will receive at least half of the profits, and we're keeping the promise again this year. What we on the Board of Directors are not satisfied with, and none of us really is, and you presumably aren't either, is the share price. In fact, it is in surprising contrast to the results achieved.
In our opinion, it does neither reflect the long-run value of our bank, of our franchise, nor our market position and the Board of Directors is taking this very seriously. We will do everything in our power to ensure that the bank's earning power is also reflected in its market capitalization. We have not been inactive in this respect. Up to now, we bought back CHF 750 million worth of shares last year. By the way, we are not alone. As far as share price development is concerned, more than 90% of all bank stocks in Europe lost value last year. Now, the following questions arise with regard to remuneration. Should performance of employees be measured solely by market capitalization of a company on the stock exchange, or is it to be measured by the operating result? UBS takes both into account.
The amount of compensation is fundamentally based on how the business performs operationally. The stock market valuation matters to many employees, particularly more senior and specialized positions. Shares can account for up to half of total compensation, and these must be held for several years. Employees who are affected by this are therefore also consistently interested in high valuation of the firm. The interests of the employees and the interests of you, dear shareholders, are thus aligned, fully aligned. The contradictory development between the operating result and the stock market valuation is also reflected in performance-related pay. Total variable compensation last year for the CEO, the group executive board, and across the firm decreased slightly compared to 2017, also because of the share price and despite improved operating results. Let's remind ourselves once again of our pay system.
Firstly, for high amounts of variable compensation, large parts are only paid out after a certain period of time. That is only when the results have been confirmed as sustainable. This period may be up to five years. Secondly, although our bank is rooted in Switzerland, it is a global player. It is also in competition with other banks around the world. This also, and more specifically applies in bidding to attract the best talent. We compete worldwide for this talent so that we can remain successful in the long term in Switzerland, in Europe, in the USA, and in Asia. This also is reflected in the pay we offer. Thirdly, in 2012, we introduced caps on variable compensation for the group executive board. The base salaries have remained unchanged since then.
Overall, total compensation for the board of directors and the group executive board at UBS has been cut by more than half compared to the level before the financial crisis in 2006. All in all, I'm convinced that today we have a coherent compensation model that takes into account the different dimensions of UBS as a global bank in an adequate way. The model is discussed in detail by the board of directors each year. It is important to us that it always remains appropriate in the light of current developments and the situation our competitors are in. We will be happy to consider all suggestions in the run-up to next year's annual general meeting as we have done for this year's.
Now, for you, our esteemed shareholders, it is important to know that including the share buyback program, you will receive 76% of net profit. This equates to a total of $3.4 billion. By the way, this is more than the sum total of variable compensation of UBS employees, which amount to $3.1 billion. Here's how it works. The bank only works well if we have satisfied clients. If the clients are happy, everyone ought to be benefiting, U.S. shareholders, just as much as the employees. Ultimately, society also benefits from a well-functioning bank. UBS is directly and indirectly one of the biggest taxpayers in the country. In addition to business performance, share price and compensation, the board of directors has also addressed many other issues. One of them was the court case in France involving UBS.
In the past, we were able to resolve legal cases quickly and on acceptable terms, including by reaching settlements. In the case of France, unfortunately, there was no acceptable way to settle out of court. Therefore, and also in the interest of our shareholders, we had no choice but to go to court. In our opinion, the trial in no way demonstrated that UBS had failed to comply with applicable laws in France and Switzerland at that time. We are therefore of the opinion that our arguments will prevail in the Court of Appeal. Nevertheless, for reasons of correct accounting and good management, we have increased our provisions. Even after intense consultation with independent experts, we consider the amount of provisions to be appropriate. It goes without saying that annual results are of great importance and of course, issues such as coping with legacy matters burden us.
We should not only look behind us, we should also look ahead. Sustainability is written very clearly on one of the signposts there. We, the Board of Directors of UBS, firmly believe that sustainability is the order of the day. This is also shown by the worldwide campaigning by young people for climate protection. No, we are not acting on the assumption that this is a passing trend. Quite the contrary. In fact, future growth of the economy, and thus of the bank, will be possible only by treating nature, people, and society in a responsible manner. We have been supporting this for years. Firstly, UBS is committed to meeting the climate targets of the 2015 Paris Agreement, to which 196 countries, including Switzerland, have signed up.
It is obvious that we have to do something about global warming when records are broken every summer, when polar ice, Arctic ice, is disappearing, and when the glaciers are melting at record speed, which is particularly felt in Switzerland. Secondly, we firmly believe that the future of our business also lies in the area of sustainability. We've been promoting sustainable investment for years with lots of energy and commitment. We see that more and more investors all over the world are paying attention to good governance and the sustainability of the business model. If you don't do it, you are at risk of business setbacks. Or to put it in other words, we're convinced that sustainability actually pays off below the line. More than $30 trillion have already been deliberately invested in sustainability worldwide, an unimaginable figure, around 60 times Switzerland's economic output.
The volume of sustainable investments has risen by more than a third since 2016, and the trend is still increasing rapidly. We're not the only bank that wants to be sustainable. However, we are among the leaders in the banking sector. At UBS, more than one-third of all client investments are based on sustainable criteria. At the same time, we are withdrawing from areas of business that pollute the environment. For example, at the beginning of the year, we decided not to finance new coal-fired power plants in the future. We have reduced the proportion of our carbon-related credit exposure in our balance sheet to 1.2% or $2.7 billion, with the trend still falling. UBS has clear criteria as to which businesses we will finance in future and which we will finance less or stop financing altogether.
It is very important for us to remain in dialogue with the companies in order to support them in making their activities yet more sustainable, because then everyone will be a winner. The company, the clients, us as the intermediary bank, and of course, our environment and society as a whole. Here at UBS, we see ourselves as part of our society, as part of Switzerland, as part of the city of Zurich. As you no doubt know, we have reconstructed our headquarters at Bahnhofstrasse 45 in Zurich, the Münzhof or the Mint. The Münzhof is a very important building historically. It was important to us to be as sustainable, environmentally friendly, and sparing with resources as possible in refurbishing it. We are certain it is the right way. We have opened the Münzhof and made the building accessible to everyone.
Spaces have been created that encourage people to come together and talk to one another face to face in real life and not via social media. Drop by and have a look for yourselves. Dear shareholders, whether it's sustainable investment or sustainable remodeling, both of it shows that without the right use of money, it is often not possible to steer development in the right direction. What money do we actually manage? What is savings and what is wealth? It is our clients' future and the future of UBS for that matter, too. Our clients can use the money they have saved, inherited, or borrowed to realize their dreams, buy a house or start a business. It is the future of their families because they use it to finance their children's education, or it is security for old age that they want to enjoy carefree.
Millions of clients entrust UBS with their dreams, big and small alike. We have to demonstrate that we deserve their trust day after day through our performance, through high standards of professionalism and competence. Competent advice is very important, especially in the uncertain markets today. I'm sure that we at UBS are well-placed to continue to be very successful in the future. We have a strategy that's right and which we can adapt to current conditions if required, a strategy that works well under challenging conditions such as last year, a strategy that many competitors are now trying to copy. Secondly, we have competent and highly motivated management teams at all levels of the firm who are developing constantly and refreshing their skills. Thirdly, we have highly qualified employees who, with their expertise, enable clients to carry out their daily financial business and to live their dreams.
Fourthly, we are at the forefront of technology and are thus shaping the digital future. Finally and fifthly, our thoughts and actions are geared towards sustainability because this is the only way we can secure the future of all of us and thus of the bank as well. I'm convinced that our thinking and our actions will enable us to achieve UBS's long-term goals, which will benefit you, our shareholders, in particular. Ladies and gentlemen, I would like to take this opportunity to thank our Chief Executive Officer, Sergio Ermotti, and the Group Executive Board for successfully managing the bank. I would also like to thank all our colleagues and their great efforts.
I would like to thank all our clients for their faith, the faith they have shown in UBS, and I would like to thank you, dear shareholders, for your backing, which I always feel strongly in the discussions and conversations we have. Thank you very much for your attention. I'm now delighted to hand over to our Group CEO, Sergio Ermotti.
Ladies and gentlemen, shareholders. I, too, would also like to wish you a very warm welcome to Basel. You will have read and heard a lot about the financial services industry in general and about UBS in particular over the past weeks and months. In addition to positive coverage, there was also some criticism to be found, of course, which often attracts more attention than the positive coverage. In my view, the glass at UBS is three-quarters full. Why do I say that? Well, our strategy is working. It works in good as well as in more challenging times. As you've heard, it's producing good results, including good financial results, as you've seen. Our net profit has increased by 16% year-over-year to $4.5 billion. The bank has become more efficient. In 2018, we improved our operating leverage by 3%.
This means that we have increased revenue and also reduced costs at the same time. With a recorded return on our CET1 of 13.1%, we are one of the best banks in the world. From the outside, the cost-income ratio is often regarded as the sole measure of efficiency. However, as already mentioned, our focus is on our return on that CET1 capital. We want to increase earnings, but at the lowest possible cost and with the best possible use of our capital. We have to strike a balance between these three metrics. We were successful with this formula last year once again, that in an environment which was not exactly favorable. Even though stock markets have recovered, the unsteady environment has made a deep impression on clients and investors, which we are still feeling today. This is compounded by macroeconomic and geopolitical uncertainties.
This makes me all the more proud of what we have achieved. The strength of our business model and our strategic focus were once again, great advantages for us. This is also reflected in the pre-tax results of the bank's various business divisions. In our core business, Global Wealth Management, we achieved a profit of over $3.2 billion. That's a strong performance. Our Swiss business, Personal & Corporate Banking, achieved a profit of over CHF 1.7 billion. Our Asset Management unit made more than $420 million in profit. Our Investment Bank also had a very good year, making a profit of over $1.4 billion. We've achieved solid results in spite of the difficult environment. How did we achieve that? Well, one main reason is that we didn't solely focus on quarterly results and annual profit.
Instead, as usual, we strive for sustainable performance in the interest of our clients, employees, and shareholders who think long-term, of course. The following figures tell you what has happened since the Investor Day that we held five years ago. Since then, we've made $19 billion in profits. We've built up $9 billion in additional capital, and over the same period, we've spent close to $6 billion in dealing with legacy issues. By the way, that doesn't even include costs for outside legal counsel. Bear this in mind, please. This has all been achieved without raising additional capital and without diluting what we pay to shareholders in terms of dividends, for example. Over that same period, we've returned $14 billion to you, our shareholders, in the form of dividends and share buybacks. Our total shareholder return is an impressive 42%, taking into account the payment of dividends.
As I've already explained, we've increased our total loss-absorbing capital by more than $40 billion. It now stands at $84 billion. We've absorbed additional costs of $3.5 billion for the implementation of regulations, and we've also redesigned the legal structure of the bank. This is just as important as the raw figures. We have continued to improve the way in which we work together within the bank. The fact is that we're already doing a lot of things right here at UBS, but we're not yet where we want to be, and we think that we can become even better. Again, and again, we have to adapt to new challenges. None of this, of course, is new to us. The environment over the last few years has not always been benign. In fact, it's often been quite the opposite. Let me just give you a few examples.
Swiss banks have been faced with negative interest rates for the past five years, and in addition, there are new regulations that make growth increasingly difficult and expensive, even in less capital-intensive businesses. There are other challenges as well, such as increasing competition, particularly in Asia and in the U.S.A., risk-averse customers, and generally declining margins. I have not even mentioned the fact that many banks have overcapacity and no longer even cover their cost of capital.
That goes for some banks in Switzerland as well, and we are delighted to be an exception to this rule. Switzerland remains the heart of this bank, but we also have leading positions in key markets worldwide. This requires foresight and an international approach in our leadership. We employ some 21,000 people here in Switzerland, but UBS is more than that, too. The U.S.A. has been a second home market for us for many decades. We have about the same number of employees there as we do here in Switzerland. In Asia Pacific, we now have over 12,000 people working for us at UBS, and just as many as we have in Europe. We also need to maintain this broad view and this global thinking when it comes to our national framework conditions in order for Switzerland to remain attractive.
Unfortunately, we have a regulatory environment in this country that is unpredictable and that often tries to solve the problems of the present with the remedies of the past, and we find this most regrettable. Incidentally, this issue has always been about protecting the taxpayer. The best protection for taxpayers is that we pay taxes. For this to happen, we need growth and sustainable profitability, and we have achieved both. We have delivered around CHF 5 billion to the tax authorities since the financial crisis. UBS is once again among the largest taxpayers in Switzerland, if not the largest. Ladies and gentlemen, that's enough about regulation. Now I would like to talk about innovation and competitiveness, because both are necessary so that we can continue to take care of the most important thing, our clients.
Everybody's talking about client focus these days, and at UBS, that's how we work. We're already doing it. Just see for yourselves.
UBS has a very sophisticated culture in helping clients to manage their wealth, create their wealth, and also increase their wealth.
Execution, technology, and financing. That's how UBS helps us in the region.
UBS is not just my financial advisor, but they're actually my partner in my businesses. In good times and bad times, they are always there for me.
I was not recruited by UBS. I was actually looking for an advisor, and I went out and looked at quite a few across the industry. After a long review, I decided UBS was for me.
I feel confident, and comfortable, and secure with UBS.
It's just the people. I like them. They are good at what they do. I trust them, and they stay.
Commitment, accuracy.
Reliable.
Peace of mind.
The people.
When I think of Swissness, it's honesty, it's integrity, it's being straightforward, and UBS epitomizes those values.
I would like to see our clients continue to talk in this positive way about UBS in five or 10 years' time. I hope they will. In order for us to achieve that, we need to always keep an eye on the long-term success of the bank. That has to be our top priority. However, at the same time, we must always focus on the current challenges that we face. If the markets are weakening, we have to take action. But because UBS is in great shape, we are flexible enough to adapt to any situation. For example, we recently decided to identify at least another $300 million of additional savings. But that doesn't change our strategic direction or our goals. We invest wherever it's most beneficial for our clients and our shareholders. Technology is one good example here.
Technology is helping us to become more efficient and to provide better tailor-made solutions for our customers. As the number one universal bank in Switzerland, UBS is the clear leader in digital banking for private and corporate clients. I'll give you a few more detailed examples. Over 40% of our e-banking private clients are already doing their banking business solely via their smartphone. And our online credit solution for SME clients allows people to apply for loans of up to half a million USD within 15 minutes. Digital customers are extremely attractive customers for us. We can serve them more flexibly, and we generate 80% more business with them than with those using traditional channels. In the research department in our Investment Bank, we use the Evidence Lab. There we have artificial intelligence, which we use to analyze vast quantities of data.
This helps our clients to make quick and well-informed decisions in a complex market environment. And we're now rolling out this approach for the whole bank. So we are well-placed to grow in the medium and long term. At UBS, we are all highly motivated and convinced that the best days still lie ahead of us. And that's not wishful thinking. There are good reasons to support that. We believe that we can grow our revenues at more than the average rate of global economic expansion. Particularly in the U.S. and Asia Pacific, we see great potential. Ultra-high-net-worth clients in the U.S. offer us considerable opportunities. We also want to build our share of wallet with U.S. citizens living outside of the U.S. And in China, we have become the first foreign bank to acquire a majority stake in a securities joint venture. Ladies and gentlemen, let's recap.
At UBS, we have a solid strategy which delivers strong returns year on year. And we expect to generate almost as much capital for you in the next three years as we did in the previous six years. We can do that because we have great employees in Switzerland and around the world, and we can count on them. We have loyal clients, as you've seen in the video. And we have a sound shareholder base in yourselves. We would like to thank each and every one of you for that. I would also like to thank our Board of Directors, and in particular, Chairman Axel Weber, for the excellent trusted collaboration and partnership that we enjoy. UBS is on the right path. It may be a little bumpy now and then. After all, no path is going to be easy all of the time.
The important thing is to be moving in the right direction and to always remain positive along the way. We intend to continue to do both. Thank you for your attention.
I would now like to ask Markus Baumann to announce the attendance figures. Check-in has produced the following figures. We have 1,254 shareholders and the independent proxy you elected present here today in the hall. In total, they represent 2,174,560,674 share votes, which accounts for 75% or 76%, rounded up, of all votes, of all shares entitled to vote. According to Article 689e of paragraph 2 of the Swiss Code of Obligations, let me announce to you the following representation of votes. The independent proxy represents 2,144,622,800 votes, and the shareholders in the hall represent 29,937,874 votes. Around 9,000 shareholders holding a total of 52 million votes have given their instructions on the individual items to the independent proxy using our e-voting platform. We are keeping a constant tally of attendance figures.
Let us begin dealing with the items on the agenda, beginning with item number 1, approval of the UBS Group AG management report and consolidated and standalone financial statements for the 2018 financial year. Let me point out that the 2018 annual report is available on our website, or you can order it. Over and beyond that, the 2018 annual report is available at UBS Group AG's headquarters at Bahnhofstrasse 45 in Zurich. I would like to invite you, dear shareholders, for a debate on item 1. The first person to speak is Mr. Vincent Kaufmann from Geneva, and I would like to ask Mr. August Lampart from Hergiswil to stand by as the second speaker. Mr. Chairman, members of the board of directors, dear shareholders. Ethos, the Ethos Foundation represents numerous Swiss shareholders today, among them, a large number of pension funds.
We're longstanding UBS shareholders, and we represent longstanding UBS shareholders who are concerned with the legal risks and the inappropriate compensation that you're proposing today. The board of directors proposes 2018 bonuses in the amount of CHF 73.3 million for the 13 members of the group executive board, of which CHF 11.3 million are meant for the Chief Executive Officer. The bonus of Mr. Sergio Ermotti proposed corresponds to 4.5 times his base salary and is getting very close to the maximum amount possible, which is capped to 5 times the base salary. The bank justifies these amounts with a rise in net income of 12% year-on-year, strong shareholders equity, and the share buyback program in the amount of CHF 715 million in 2018. However, Ethos would like to point out the following facts.
The UBS share in 2018 lost 31.8% of its value. In the period from 2016 to 2018, the total return of the UBS share decreased by 28.4%, while the decline in the peer group amounted to only 1.8%. Secondly, the risks related to the tax fine in France and distribution of subprimes in the United States of America prior and during the financial crisis might have or may have considerable impact on the bank's share capital in the years to come. The core equity tier 1 ratio of UBS decreased for the first time since 2014 below 13% due to the rise of risk-weighted assets in the share buyback program. Against this background, we believe that payout of the annual bonus close to the maximum value is not justified and is far too high.
Dear members of the Board of Directors, Ethos considers it important that UBS come up with a criterion according to which the relative performance of the share price is taken into account. This would mean that even with the worse share performance in a peer comparison, high compensation is still being paid. Ethos recognizes that UBS has made great efforts in the past years to improve on transparency of its compensation report. This is why Ethos intends to keep up a constructive dialogue with the bank on it, we expect that the Board of Directors review the compensation system to bring it more in line with the interests of shareholders and other stakeholders. Dear shareholders, the legacy risks are a bitter reality for us UBS shareholders. Any fines related to them might cost us CHF billions, and not enough provisions have been made for them.
In view of these risks, the payout of the bonuses proposed today and the proposal for discharge come in too early. The same applies to the share buyback program that UBS carries out. The Board of Directors and the Executive Board have to remain accountable for any fines UBS will have to pay. Variable compensation for 2018 is to be paid out only once that it has been established there is no guilt for UBS in these matters. Ethos proposes that you vote against the compensation items and against discharge to be granted to the Board of Directors. Thank you very much for your attention. Thank you, Mr. Kaufmann. Let me say a few words about three of your key points. On the development of the performance of the share price, I alluded to it in my presentation.
Although we're not happy, we're disappointed with the most recent development. We believe that the share price performance at the end of the day reflect the significant improvement and not fully reflect the recent improvements, and we're creating conditions that will help us in future, the deferred stock allocation or type of Executive Board remuneration with the share price, and to many employees directly depend on the share price performance. We're very much focused, in addition to the share buyback program, to take further steps to bring the share price up again. We're as much disappointed with the share price performance as you are and the shareholders are. As far as the legal risk concerned, you referred to the tax fine in France. This ruling is far from final.
It relates to a legacy dating back to times when different managements were in charge, and it relates to the period of 2005-2012. The board of directors is very much focused on this development in France. I can assure you that we devoted a lot of time, meeting time, to this matter. The CEO and myself this morning, and you saw it at the entrance, made a statement to Blick. In the first part of the interview, we addressed the matter in particular. We do take into account such developments, and I can assure you, as this dates back to times before we worked for UBS, we have to refer to what the lawyers compiled and ask ourselves whether the evidence included there were sufficient to accept a settlement that would be a great burden for shareholders, and there was no final discussion about it.
Apart from that, we always focused on finding a solution throughout the year. We didn't manage to do so. The ruling that the first court passed has been appealed. This case will keep us on our toes, keep you and us, UBS, on our toes for some time. As far as the CET1 ratio, you said that we went below 13% towards the end of the year. That is correct. Our objective is to be around 13%. Now, we went down to 12.9% at the end of last year, but at the end of the first quarter, we were back up to 13%. We corrected that. That was a slight decrease in the CET1 ratio, especially when the books are reopened at the end of the year. You shouldn't be surprised or nervous about it.
UBS continues to have a very strong capital base and is among the best capitalized banks around the world. A capital ratio is part of the criteria also for performance appraisal of the CEO and the executive board. It is not only the board of directors, but also the management in their daily work who focus very strongly on the bank's capitalization. In addition to that, the average return on the CET1 capital is one of the criteria for deferred allocation of shares. It's not only achieving a certain capital ratio. In recent years, we've built up capital, but it's also the maintaining of it and maintaining it sustainably that is part of our compensation system and plays a role for deferred allocation of shares or grant of shares and has direct impact on payout.
I can assure you that when it comes to capital, similar to the issue of France, we as a board of directors and the executive board, we are very much focused on defending your interests, the shareholders. It goes without saying that the share price last year performed as it did. 90% of the Swiss banks, of course, of the European banks face the same problem. Second person to speak is Mr. August Lampart from Hergiswil. I would like to ask Sebastian Röthges from Berlin to stand by as the speaker to follow. Mr. Chairman, ladies and gentlemen. Let me briefly present myself to you. I'm August Lampart. I was a freelancer for 50 years and had a business at the Municipality of Emmen in Lucerne.
I'm 84 years old, and for more than 60 years, I've been a client with UBS, and for decades I've been a shareholder of UBS. At the time when I bought the shares, it was around CHF 80. Today, I'm speaking from my personal perspective as a client and a shareholder. Mr. Ermotti's statement about Q1 2019, that it was run badly, that's correct, but why was it bad? Well, because clients had partially lost trust in UBS. Because share prices, stock prices pointed up almost everywhere, but not for UBS. Well, Mr. Ermotti, you can say as long as you like that UBS is the best capitalized bank. That will not help you a great deal if there is a battered trust in the bank. And in the first quarter of 2019, this was the case.
Trust, ladies and gentlemen, is nothing to do with compensation and certainly nothing to do with bonuses. Mr. Weber, Mr. Ermotti, and all the other members of the Board of Directors, I'll tell you, try and reinstate trust in UBS. UBS also has a cost problem. Unfortunately, you haven't moved a great deal. Now, looking at personnel costs, for instance. So I think a lot of things become clear. When you're a craftsperson, you're looking at CHF 100,000 a year. In other businesses, in the insurance industry, CHF 120,000. In domestic banks, around CHF 150,000. For UBS, including bonuses of any kind, we're looking at CHF 250,000. Mr. Ermotti, in the long run, and in the current banking setting, where revenues are decreasing all the time, this cannot work forever.
As an employee, I prefer to have a safe job without bonuses than to get higher compensation but then be sacked because the bank's revenues don't allow them to keep me anymore. Mr. Ermotti, let me remind you of something you said on TV two years ago when talking about the enormous salaries being paid, which was the talk of the town at the time. And apart from you, present as the CEO of UBS, Mr. Meyer, the CEO of Swiss rail was present. Mr. Meyer was asked whether he was happy with his compensation of CHF 1 million a year, and he said, of course, he was happy and he made a good living on that. He said he liked to go to work, and he was pleased at work.
Mr. Ermotti was also asked why in a single month he would be getting more than CHF 1 million, and the answer is, he didn't know either. He didn't ask for the amount, he said, and he was even surprised himself how much he was getting. Well, who actually decides on compensation? After a lot of toing and froing, they said at the end of the day, it was the shareholders. You, everyone in the hall here, who by vast majorities approve compensation every year. Ladies and gentlemen, dear shareholders, let's get on the move and let's get rid of those inappropriate bonuses and put a stop to them once and for all. I've got 30 seconds left. Now, these have been the two important points for me to address. There would have been a third one, but there's time for this.
It's the battle of the Grande Nation with the UBS, where all you can say is when two are battling, there is a whole army of lawyers who enjoy that and benefit from it. Thank you very much. Thank you, Mr. Lampart. Let me assure you, we at UBS are very much focused, and I've repeatedly said so, very much focused on gaining the shareholders' and our clients' trust and maintaining it, preserving it. In all the conversations I have had in the various cantons of Switzerland and around the world on behalf of UBS, similar as you've seen in the film, there's always been a great expression of trust from clients in the UBS. I don't think that I'm being selectively showed clients that have trust and I'm not being shown clients that do not have trust. I don't believe that.
Of course, I heard statements that reflect deep trust and concern, of course, with some of the details, some of what's been happening in the past year. I understand that. The last year, in particular, the case in France was a setback for us. For years, we've tried to drive ahead UBS in terms of strategy, in terms of capital, in terms of settling legacy issues. Of course, there's no doubt about it, last year was a setback in this regard. This setback dates back to times where this management was not in charge. Like with all legal cases, they take a lot of time, and this thing has protracted for such a long time that we're only cleaning it up now. Also, because in France, preparations took such a long time for this case.
We don't believe that we can be happy with this case, of course not, and it's a great concern to us. The only thing as the current management we might be doing wrong is we cannot change the past, but the only thing we could be doing wrong is to mishandling this case. I can assure you that we've done everything on the legal side, negotiating with France, and on the financial side as far as financial provisions are concerned. We have done everything based on law and good practice and the requirements for provision taking. We've done everything that is in line with what seems to be required for this case. As far as compensation is concerned, well, you referred to this TV show with Mr. Ermotti.
Well, I would love to ask Mr. Ermotti to speak, but I think in our interview yesterday, we said everything that was necessary about compensation. I can tell you that. The performance of the CEO and the entire management has been reviewed and has been looked at properly, and the system has fundamentally remained unchanged since 2012. We believe it continues to be appropriate. I don't want to go into the details, because later on the advisory vote on the compensation report, you will have another opportunity to take the floor there. There will be speakers there. I will be coming back to talking about this then. Can I now ask Mr. Sebastian Röthges from the umbrella organization of shareholders in Berlin to take the floor, and Urs Troxler from Schlieren to stand by as the following speaker?
Good morning, ladies and gentlemen, shareholders, Mr. Weber, Mr. Ermotti. I'm Sebastian Röthges, and I come from the environmental and human rights organization, Urgewald, in Berlin. Speaking on behalf of some shareholders as well. We have been concerned for a long time with the issues of coal and the environment. I welcome your words on sustainability and the Paris Climate Convention, Mr. Weber. You'll see what I think about that in a moment. You say that UBS isn't going to fund coal activities anymore. I have read as well that you are part of the Alliance of CEO Climate Leaders. You're involved in the Climate Action 100+ as well. It all sounds very nice, very progressive, as if you were really reading the zeitgeist and understanding what's going on.
Let me quote from a report, particularly with respect to coal, and then I have some questions, because I don't really see that your strategy is actually sufficient in order to achieve what needs to be achieved. You say in your climate strategy that financial transactions for coal-fired power plant operators will only be offered if their business checks out. You say that coal activities will only be capitalized under limited conditions. You talk about a transitional strategy. I don't know what you mean about that. You seem to expect operators of coal-fired power stations to reduce their CO2 emissions under the terms of the Paris Climate Convention. How is this to be done? You have an answer. You say that you check out your customers to ensure that they do meet their country's requirements under the Paris Climate Convention.
If they have no transition strategy, then you do not fund them. That's what you say. Let me ask you some questions then, because when you talk about operators of coal-fired power stations, it says in brackets, more than 30% coal dependence. What do you actually mean by that? I mean, coal is not a drug that we get addicted to, is it? We have a clear definition. You look at how much power is generated from coal. There are investors that look at the sales that are generated through coal. I think that's the incorrect approach. Anyway, perhaps you could tell us what you mean by dependence on coal. Secondly, why are you limiting yourselves to operators of coal-fired power stations? What do you do with companies that are building new coal-fired power plants? There are lots of them.
If you look at coalexit.org, our website, you can see who is building new power plants, coal-fired power plants. Perhaps you can see that UBS is still involved there, providing funding. What about coal mining? You're fairly vague about that, even though that's a big part of the problem. What do you mean when you talk about limiting activities in the coal mining sector? Perhaps you can explain that to us in some greater detail. Coming onto the Paris Climate Convention, you've talked about the transitional strategy. Companies have to have a transitional strategy that fits with the rules of the Paris Climate Convention. What does the convention actually say? It says that we need to limit global warming to something clearly below 2 degrees Celsius, and numerous countries have set out additional rules on that.
There was a special report from the IPCC last year about the issue of 1.5 degrees Celsius global warming, and that report assumes that the climate contributions that have been set aside by some countries will lead, in fact, to global warming of 3 degrees Celsius or more, so it's not sufficient. You shouldn't look at these national climate set-asides because they're not sufficient. If you look at the report, then it becomes clear that we need to reduce our dependence on coal much more rapidly. OECD countries ought to get out of coal entirely by 2030. Under point D.1, if you want to look at it, the report states that National climate contributions will not be sufficient, or would only be sufficient to keep global temperature rises to 1.5 degrees Celsius if we take much faster action, much more rapid action between now and 2030.
If you look at what's actually happening and read the report, it reads like the script to a horror movie, to be honest, with various disaster scenarios, and I hope that you are realistic enough to understand these risks and change your behavior accordingly. I have a very specific question for you. I'd like to know whether the Board of Directors or the Executive Board have read the report or discussed it in any of your meetings. If you did, what conclusion did you come to about the report and its content? Secondly, do you agree with me, given what the report says, that national climate contributions are not a suitable measure when trying to decide whether or not you should fund certain companies in certain countries?
The third question that follows on from this is how do you handle companies from countries like the USA, where, as you know, Donald Trump has decided to exit the climate convention. Do you have different criteria that you apply there? What do you do in cases like that? Now, I've already mentioned the issue of coal-fired power plant operators and companies building these new plants. You have companies who are still intending to build new coal-fired power plants. You say you don't want to finance companies operating the plants, but there are plenty building the plants whom you appear to be funding. So how does this all fit together? I think you really need to step up your requirements here. Now, I come from Germany, and I want to briefly talk about the climate protection plan that we have in Germany. It's a plan for 2050.
It's not really Paris-compatible at all. We don't even have interim objectives. We have a coal commission. They have certain objectives. I don't know whether those objectives will be achieved. But anyway, it's not compatible with the requirements of the Paris Climate Convention at all. What does that mean then for investment in German power generation companies? You've had RWE on your list of clients for a very long time. RWE still seems to be covered by your policy then and can continue to be a client of your bank. RWE is Europe's biggest CO2 emitter. It has no clear plan for exiting coal. It even wants to continue with brown coal-fired power stations, and this is obviously a huge problem, particularly if it's receiving support from UBS. Many banks and investors have shown the red card to RWE.
We were in Oslo last week and talked to the Norwegian pension fund. They are pretty clear that they no longer want to invest in RWE because they say, "We can't see that RWE has got any credible plan for getting out of coal." I wonder if you can tell us what UBS plans to do with RWE. Let me conclude. I like coming to Switzerland, not just because of your beautiful mountains. Someone else has mentioned the problem of the melting or the receding glaciers. I think Switzerland is rather more progressive than Germany. It's another reason why I like to come here. With your policy on this issue, you've got a long way to go, a lot of improvement to achieve. There's a lot of hot air, and I hope you can turn that into more concrete action and find some proper solutions.
Thank you very much. Well, thank you very much, sir. I will split your intervention into two parts, if I may. Thank you, first of all, for the praise for our climate strategy, or at least the positive words that you said about it. Thank you for recognizing that we are serious about what we're doing in this direction. We are indeed very serious. The Paris Climate Convention of 2015 is one that we support, of course. Switzerland has signed up to that as well. Next week, on the 7th of May, I'm going to a summit in Paris, which marks the fourth anniversary of the signing of the convention. We'll be asking where do we go from here. Many finance ministers, those from Germany, Switzerland, France, many others, representatives of the banking industry, including myself, will be there.
There will be a number of panels discussing this matter. I can assure you that when it comes to the issue of climate change, we're not just participating, we are leading the way. As the chairman of our board, I'd like to tell you on behalf of ourselves and all of our employees that we are committed to this because we believe that it is essential to be taking action in this area. Allow me to assure you that with everything we do, we consistently look to our climate strategy and look to the recommendations of international panels on this subject. In the financial sector, we have the task force for financially related disclosures. That's from the Financial Stability Board. We have for many years been closely associated with that and been in close dialogue there. We'll continue to proceed in that way in the future.
We've taken a leading position, in fact, in the implementation of these recommendations, which are in direct line with the Paris Climate Convention and require us to consider the implications of climate change for our companies. You will see many points in the annual report that address this. Now, you talked about us moving away from funding new coal-fired power stations. We've taken this down to 1.2% of our portfolio. That figure continues to fall. We're well on the way then. We haven't reached our target yet. We will continue to be very consistent about implementing our climate policy. We have a committee on the board, actually, that looks after corporate culture and responsibility.
I chair that committee myself, actually, at our regular meetings, we always spend several hours talking about the bank's culture and looking at our climate objectives and the responsibility that we bear in that area. I think if you understand Switzerland, you will see that we are very concerned about the climate. You only have to go to the mountains in the summer to see the effects of climate change on our immediate environment, and we are very much committed to ensure that we continue to lead the way in this area. It's a long path, of course, and there are many details that we will have to discuss. I don't think it's very useful to go into any greater detail about such questions here at the AGM. Rest assured that we are dealing with all of these details. We certainly do read your reports.
I have read your reports. I've looked at them very carefully. You asked us a concrete question about RWE. I'm sure you well understand that we can't discuss individual client relationships here. Yes, we certainly do check out every client relationship in the light of our climate strategy. If you agree, I would ask you to get in touch with me personally. I'd be delighted to meet with you so that I can explain our strategy to you in greater detail. If that's all right with you, I hope we can proceed in that way. If you're not happy with what I tell you, then please do come back to next year's AGM, and then you can publicly tell everybody what you think, and I'll be able to respond again. Thank you for your questions.
The next speaker on the list is Mr. Troxler from Schlieren, followed by Brigitta Moser-Harde r from Furtwangen. Mr. Ermotti. Perhaps you could just speak closer to the microphone. Thank you. Yes. There are young people out there demonstrating, and I'm a climate change soldier myself today. You're busy stuffing money into coal, oil and gas, plastic and everything else, contributing to the climate war. With your massive payments, you've become the new UBS sun king, haven't you? Show us your own sun, please. I've read that you can only get a mortgage from UBS now if you're using solar energy or if you're heating without oil or gas. Perhaps you'd like to become a donor with the Red Cross, then you can directly help people in Mozambique who are so badly affected by climate change.
Otherwise, you're not going to be able to get away without being criticized by us. Let me invite you, take out your hanky. Make a knot in the corner. Don't worry, it won't come untied in the wash. Mine is nice and clean, and you can use it to wipe away your tears. Perhaps you'd like to buy all of your colleagues some good quality handkerchiefs. Give one to Ueli Maurer as well, the outstanding Swiss president. Okay. I hope you soon feel better. Yes. Something else as well, of course. When it comes to your votes on compensation, I shall certainly be voting no, and I would invite others to do the same. Thank you, Mr. Troxler. You're holding up your handkerchief there. Look, I've got one here. Why don't I tie a knot in the corner to remind me to say something about your topic next year.
Look, my handkerchief is beautifully white. I won't forget. If I may give you a gift, I'm just reaching over to the CEO. Here, I have a gift. A wristband with the Paris Climate Convention logo on it. I'd be delighted to give that to you. There are several in the packet, so you can give one to somebody else as well. If everybody in the room would take a packet, keep one, and pass one on, I think that would really help to spread the word about what we need to do and about our obligations to our environment. Those wristbands are easy to keep on. You don't have to remember to have your knotted hanky with you all the time. I had to put my headset on to be able to understand you.
When you stand at the speaker's rostrum, ladies and gentlemen, you do need to speak clearly right into the microphone so that everybody can hear you, and also so that you can be interpreted. Please don't forget. As to the content of what you've said, well, it's not the case that UBS doesn't donate to organizations. You mentioned the Red Cross in Mozambique. We, institutionally and through our foundations, are very active in donations to humanitarian relief funds, catastrophe disaster funds, and so on. We also use client money in the fields of philanthropy, humanitarian assistance, environmental programs. This is one of our issues in Asset Management, and we are certainly one of the leaders around the world in this. We have a large client base of people who are very interested in philanthropy.
We help them, through institutional channels, to do this, and to do it professionally at the same time. Thank you for your suggestions. They are most welcome. We now have Ms Brigitta Moser-Harder. Would you please come to the podium, and Veronika Hendry from Actares is next. Ladies and gentlemen, according to the annual report, there are a lot of expensive legal cases going on in Puerto Rico, in the U.S., in Europe, and in Switzerland. You seem to have put $2.8 billion aside to try to cover these cases. I think the cases in the U.S. about the mortgage-backed securities are going to cost you a lot of money. It cost Barclays $2 billion alone. There's the tax fraud case in France. As if that weren't enough, you didn't agree to the out-of-court settlement of $1.1 billion.
The fact that you encourage people to invest their money without paying taxes is nothing new. You did the same in the U.S., and you paid for that as well. In the end, the U.S. ended up demanding data on those engaged in tax evasion. Which has ultimately led to us having to abandon banking secrecy. That's history now. The settlement in the U.S. cost you $780 million. It wasn't much money at the time, really. That was because the U.S. sub-prime crisis had brought the financial system to its knees at the time. Various banks, including UBS, had to be rescued, of course. All sorts of expensive legacy issues. We've seen the share price drop 32% to just over CHF 12. Falling yields as well. U.S. trade wars.
You're also talking about savings measures of CHF 300 million, which will probably mostly fall on the shoulders of people who've been employed by the bank for many years. Well, I think you and the management and the board ought to be tightening your belts as well. I call upon the board and the executive board you should cut your compensation. I propose that you only take or only receive 50% of your bonus. That would enable us to save about CHF 38 million. It would also be a sign of solidarity to the tens of thousands of employees who only earn CHF 50,000 to CHF 100,000 a year and don't get any bonus at all, or maybe just a half a month's wage, so somewhere between CHF 2,100 and CHF 4,200. What about women who get their bonuses cut after they've taken maternity leave?
You could save millions more if you would break off your relationship with the McKinsey people, who are supposed to be helping you to find your weak points. Perhaps you could find them yourself and save yourself some money. You could also do away with your Formula One support. It used to be CHF 200 million. Now we don't have any current figures. You could also do away with costs for first class tickets and luxury hotels for the guests that you invite to racetracks around the world, Singapore and other places. Not to mention the environmental aspect of this sport. I don't really see how that lines up with your climate objectives. You weren't able to give us an answer about that last year at the AGM.
In writing, I was told that Formula One had become more sustainable, that its fuel consumption had been cut, and that smaller hybrid engines were now being used. In other words, combi-engines, electric and still petrol driven. Nevertheless, these races last several hours, and you see a lot of racing cars whizzing around the track, which certainly emits a great deal of CO2. In 2015 to 2017, you provided a good CHF 10 billion to companies involved in very high impact activities in terms of the environment, I think you need to do a great deal more. Shareholders, I would recommend therefore that you vote no on all compensation-related agenda items, also because of the ongoing legal issues, you refuse to grant discharge. I've got two questions. How many members of the executive board came to the meeting today using public transport? I bet none of you did.
Secondly, how much did you spend renovating your building at your headquarters in Zurich? Since you've expanded the building quite a bit, I guess it must have cost at least CHF 300 million. Perhaps you can tell me the figure. That's all for today. Thank you. Well, thank you very much, madam. You asked a couple of questions there at the end. How many of us came on public transport? Well, actually, we didn't even make the entire executive board come to the meeting today. Some of them are dialing in from outside. Those that you see on the podium came, of course, but not the entire team. They're following proceedings live over the internet. So we've certainly saved not just in CO2, but also some train tickets. Did you come on the tram or the train, Mr. Weber? What about your colleagues there?
Well, our general secretary did indeed come by train. I did. Well, at least one of you did. I didn't give you the floor again, madam. Perhaps I could just answer because you already had 6 minutes. We're not sharing details of the refurbishment costs of our headquarters. As I said before, it's a key building in the Bahnhofstrasse in Zurich. It's a historic building, a listed building. We had to maintain the external facade and the internal facade, which we did, of course. When renovating old buildings, it costs more than building a new one would at all. We've done our best with it. We've tried very much to make it environmentally friendly. On every floor, when you come out of the lift, you'll see a notice that states that this is an environmentally friendly building. Have you been there?
Well, I've seen part of it, and I've done the virtual tour on the internet as well. It was a very successful refurbishment of a listed building. When you invest in sustainability, it costs you more at the outset, but it pays out over the years. I didn't start the refurbishment project. It was begun before my time, but I've seen it to a successful conclusion. The people of Zurich are happy with it. It's a key symbol in the cityscape of Zurich. Now, to your 3rd point, I don't have the same understanding of the law as you do. You seem to think that, from a U.S. point of view, if you're guilty once, then you're always guilty. Well, I wasn't here at UBS when those events took place. I have to rely on the information that we have available.
I was at the German Federal Bank and a professor in Chicago at the time. I didn't have full access to the files at UBS prior to 2012. These days, I'm responsible for this company with all of our many thousands of employees, and I cannot simply accept what you say. I believe it should be that we are innocent until proven guilty. That's a principle that has stood up since Roman times. We all stand by that. We stressed it in our interview this morning as well. In the French indictment, we saw no evidence of any wrongdoing at UBS back then against the law or in France and in Switzerland at the time.
In our first few years in the board and in the management team at UBS, myself and my colleagues spent a huge amount of time rendering UBS more transparent in fiscal terms and sorting everything out so that that could be the case. Nobody knows better than us what it means to move a company in the right direction and to draw a line under what's happened in the past. By drawing a line under what's happened in the past, you can't simply make it go away. It's a fact. It's there. We can't change the past. We can certainly ensure that we deal with what happened in the past in a responsible way that supports the interests of our shareholders, and that is what we have done. Yes, I'm sure you have. I do have something else, Mr. Weber, if I may.
You've heard what people have just said in the room. I will allow you to ask one more brief question. According to Swiss stock law, you are required to give shareholders information about this sort of thing because, with this renovation of your building, the same as with your funding of Formula One, shareholders have the right to know what you're doing. When you are secretive about it's not just running counter to the law, it's also rather laughable. Why do you need to keep it secret? If I don't get a satisfactory answer, I shall reserve the right to find out in other ways. We did already give you the answer. I will certainly be checking it out. We have already given you the answer.
It's cost around CHF 200 million to carry out the refurbishment of the building, which I'll remind you is 100 years old, and which is a listed building and needed to be brought up to modern standards. It's not about us trying to keep the figures secret. You pulled another figure out of your hat, that figure is incorrect. It's not about us being intransparent. We've given you the information. You have a right to that information, of course. When you requested the figures, we gave you those figures in writing, I'm delighted to share those figures verbally here today at the AGM. That everybody knows, I don't know where you got your estimate from. I can tell you it was approximately CHF 200 million. When I look at other figures published by other banks in Zurich that have refurbished their buildings.
Swiss Re, for example, spent CHF 220 million. Other banks have spent around the same. It costs really a lot of money to bring an old building up to modern standards while maintaining environmental or sustainability requirements. This kind of work is expensive in Switzerland. The materials are expensive, as is the manpower, I don't think it's unusual for our project to have cost this much money. We also believe that it's in the interest of our shareholders to have a decent building as our headquarters in Zurich. A building that reflects our image, which is open, which is public, and allows people to come in and talk to us. This project was planned out well before our time, we brought it to a successful conclusion, keeping the costs in line with the budget.
I'm afraid I can't agree with your argument that we have been secretive about the figures, I would like it to be minuted that we not only provided you with the figures, but that I verbally repeated them here today. The figures were not provided to me directly in that way. It said approximately CHF 200 million. That's not a precise figure, is it? I want a precise figure. It's precisely what I just said, approximately CHF 200 million. An email came to you, I believe, from our Secretary General, who has excellent attention to detail. Next on the list is Veronika Hendry, followed by Ernst Schmid.
Mr. Chairman, ladies and gentlemen, members of the Board of Directors, dear shareholders, my name is Veronika Hendry. I'm the chairman of Actares, Shareholders for socially compatible and responsible business. Actares makes voting recommendations to its members and represents their causes and voting rights at annual general meetings like the one today. Today I'm also speaking on behalf of ShareAction, a British non-profit organization that defends responsible investment. First of all, I would like to thank UBS. I thank them for two things. First of all, the wonderful renovation at Bahnhofstrasse. I have always pursued work on the day before the opening when all the fences were taken away.
I've seen how much love and devotion was put into that, and I'm pleased with the very nice building and facade, but also with the very nice cafe where you can get a cup of coffee at a normal price, not typical of Bahnhofstrasse. That's the first thing. Before I get on to more critical things, the second thing I would like to thank UBS for is its willingness to enter into a dialogue. They're always willing to nurture the dialogue with Actares and to respond to our questions that we submit in writing and to then follow up on the questions that we present at the AGM then itself. I would like to thank you very much for this. Yet, I have three things I would like to touch upon, and some of it has already been mentioned: climate protection, human rights, and compliance.
Compliance excluding France. I want to be brief and talk about the funding problems that we have identified. You said that you have ambitious sustainability objectives in a press release on March 21st, 2019. You said that UBS was not going to finance any new coal power plants and operators of coal power plants who cover their needs for more than 30% with coal will be supported only if they have a strategy of conversion that is in agreement with the Paris Agreement. Actares welcomes that, also that UBS has disclosed figures on climate-related risks. I think you've mentioned this before. You're in a dialogue with the climate-related financial disclosures task force, which we greatly appreciate. Now from the figures published, we take it that neither in 2017 nor 2018, UBS has identified any climate-related risks.
This is a surprise because in 2017, 2018, UBS funded risky and CO2-intense fossil energies. The report says the following, backing on climate change, that various organizations, environmental and climate protection organizations published 2018, CHF 22 million UBS funded companies that produce tar sand or operate tar sand pipelines. More than CHF 30 million went to companies that extract Arctic oil. CHF 250 million went to companies that extract oil and gas from ultra-depth in the oceans. Actares asks itself whether this is compatible with the Paris Agreement objective of climate increase by no more than 1.5%, and why should this not be considered as climate-related risk? A second question has to do with UBS's handling of companies that have problems with human rights. We assume that there are hardly any shareholders who are in favor of dubious transactions if they only knew about them.
Therefore, let us remind you that on the 25th of January, 2019, a dam of the Vale company broke and a Brazilian small town was flooded as a result. The mudslide cost the life of 306 persons, 100 of them have still not been found. Only three years earlier, another dam had broken, run by the Samarco Mineração company, and the Vale company has a 50% stake in that company. Following an investigation by Brazil, negligence of the Vale company managing the dam was disclosed, and the devastating mudslide could probably have been avoided. UBS is holding more than 8 million shares of Vale in April. Of course, we understand if you do not want to comment on specific client relations, but the question arises as to how UBS deals with customers in such cases. What does it take for UBS to withdraw from investing in a client?
There is an international network of persons affected by Vale, and on behalf of that network, Actares demands an answer. Thirdly, compliance and internal controls at UBS. The other Swiss major bank, Credit Suisse, has been in the headlines for fraudulent loans in Mozambique. Swiss television recently disclosed that UBS is involved in a very similar case. In 2014, Papua New Guinea's state took out a loan of AUD 1.2 billion, and with the money, the government wanted to buy shares from a company that wanted to open a gas field in Papua New Guinea. The loan was smuggled or circumvented the government, and it turned out to be a heavy load for the state after oil and gas prices had collapsed. FINMA is investigating the matter now.
Actares would like to know how it was possible for a loan transaction that was in breach of the local constitution, circumvented internal controls of UBS. In brief summary, I have the questions on behalf of Actares. Funding of companies in the field of Arctic oil and gas or ultra-deep water extraction, is it compatible with the objective of a maximum increase of temperature of 1.5 degrees? Ought such funding not be considered a climate-related risk? Secondly, what does it take for UBS, not Credit Suisse, UBS, to withdraw from funding businesses like Vale, businesses that are negligent in handling the local population? Thirdly, how is it possible for the fraudulent loan transaction in Papua New Guinea to circumvent internal controls? Thank you very much for your kind attention. Thank you, Mrs. Hendry. Let me answer the three questions.
First, I mentioned that to the colleague from Germany before. It is important for us that we look into businesses on a case-by-case basis. Sometimes we have to make compromises, but it is important that we have clear criteria for transactions, and criteria that are transparent. I would also like to thank you that you gave praise to us on the refurbishment. The cafe, the cafeteria is really an enrichment to all of us who work there. You also thanked us for our willingness to be in dialogue. This is an expression of our willingness to remain in a dialogue, especially on climate-related issues. More specifically to your questions. Well, when it comes to environmental and climate-related issues, we're moving towards sustainability. I said before, we're not at the end of the journey. There's a lot to be done yet.
As far as your question on climate funding is concerned, or climate-related funding is concerned, we've committed to doing funding of coal power stations only if there is a dependency of less than 30% on coal, and to fund those companies only in their strategy of supporting the Paris Agreement, and to bringing themselves in a compatible position. In increasing the share of renewable energies in those businesses. It's a clear catalog of criteria. No new funding of coal power plant operators, and funding only if it is sustainable or leads to more sustainability, and only if the business has already given evidence of being below 30% of coal dependency, and that they're on the journey and taking that journey seriously. All other businesses are excluded from funding. The second example you mentioned, about the dams that broke. Well, we all experienced that, saw it on television.
I was deeply touched by what was happening there, like probably everyone else in the hall was. It is important, of course, to look into the causes of such accidents and disasters, and that they be investigated and we get clarity of them so as to avoid future accidents. You referred to a specific company that was in charge of building the dam. I am not going to make a statement on specific companies, in particular as to whether our Asset Management is or was invested there. It is important for us if in Asset Management there were or are such investments made that the engagement is geared towards these businesses moving in the direction of sustainability.
If we do not withdraw from funding a business, then of course we want to gear this company towards the right direction, especially when it comes to sustainability-related matters or human rights or environmental risks. This is something that is very dear to our hearts. As far as Papua New Guinea is concerned, of course I cannot comment on Credit Suisse, you will understand. As far as UBS's position is concerned, all our lending processes have been complied with, and we've got the usual high standards in the battle against anti-money laundering and funding of terror. We've developed very clear standards recently. We usually talk about AML, anti-money laundering, KYC, know your client programs. Like many other banks, we're in a process of continuously adjusting the standards and making them more rigid. We've looked into the matter.
We are certain that the high standards we have in the bank, they have not been neglected, but have been applied, in particular as regards money laundering, terrorism, and corruption risks. Let us move on with Mr. Ernst Schmid from Dielsdorf and ask Friedrich Dumpke from AMV to stand by. Good afternoon. Many shareholders believe that now all the legacies have been eliminated with UBS, and we're back to normal business. We've got this tough ruling from Paris because of very old legacies. Of course, it's not a nice thing to be indicted at the Tribunal de Grande Instance in Paris by the French state for illegal banking transactions and money laundering, aggravated by tax fraud. Of course, it's not to be welcomed to be taken to a French court.
Apparently, the French judges consider UBS to have a criminal record, to have paid similar fines, and they consider it's an opportunity on behalf of the French people to penalize such detested practices with a huge fine, EUR 3.7 billion. Now, in church, you usually regret first and then repent, and then you are forgiven for the sins. Following the Paris court case, we now have the shareholders regretting following the huge fine, and shareholders having the bitter suspicion that we haven't got rid of all the sins. The bank is actually doing well, but you can only please with it to some extent because there are some stains on the white shirts. I would like to ask the general counsel, when do you think will UBS's reputation be as clear and white as Mr. Weber's hanky? Well, thank you very much, Mr. Schmid.
Let me first of all ask Mr. Diethelm. Well, I understand the question as to say, well, when can we expect the end of the court case? He can tell you about that on condition that the Court of Appeal we have taken the matter to in France will probably not be the last instance. But he can tell you what his expectation is. Markus, over to you, please. Markus Diethelm, our man for legal matters. Thank you very much, Axel. Let me first of all talk about the misunderstandings. The potential settlement at $1.1 billion. Such a settlement has never been up for approval or has never been on the table, unless Sergio Ermotti said.
We've looked into the matter very meticulously on our own part, knowing that the French state carried out investigations across the same period of time that resulted in the ruling, not including any evidence or indication as to illegal acts in France. When I left the court building, I said that this ruling was not understandable because it is not to be understood because the French court didn't understand that the fundamental law on European taxation introduced in 2004 on behalf of Belgium, Luxembourg, and Austria, negotiated by European countries, Switzerland, or the countries of the EU, was offered to Switzerland, and there was a state agreement between Switzerland and France allowing for the time being until the automatic exchange of information was introduced as specified in the same agreement and putting into effect in 2017 to alternatively retain taxes to be paid to the French state.
This is European legislation. Like every piece of European legislation, it will have to be translated to national law. You will hear more about this in the months to come as we're going to have a political debate about this matter. It's not only a matter for UBS, it's about recognition of a state accord that explicitly deals with untaxed money held by French citizens in countries that still have banking secrecy recognized until the introduction of the automatic exchange of information. You can assume that in all legal matters, in all litigation, we are analyzing this, both we're doing this in the board of directors and the executive board discussions will go on. We'll perhaps debate even in public, and the date for the Court of Appeal to look into the matter will probably be towards the end of 2020, and there'll be another two levels of appeal.
It's also possible that the interpretation of the interest taxation agreement will be taken to the European Court or may be pooling forces with other countries that had state accords. Thank you very much. Let me then respond to the other matters. I owe something to Mrs. Moser-Harder on the final point she made, the reduction of bonuses following maternity leaves. I, as the chairman of the board, looked into the matter very carefully when the reports went to the press. I can assure you that we have clear criteria and controls established in the bank to make sure that all staff get fair pay and no one is discriminated against, and certainly not somebody on maternity or paternity leave. This, I think, is very important. I think that personally.
We have standard industry paternity leaves and benefits, and want to make sure to support these people when they decide to have families, that they can reconcile family and business. I have two cases in my office, and I can assure you that we as UBS are flexible enough to make sure that employees can reconcile family and work at UBS. The press reported about cases, and when they reported, we looked into whether there were outliers, particularly when persons on maternity or paternity leave wanted to return to an activity and they had left full-time employment and wanted to come back, and we looked into that. I will get back to this. Mr. Friedrich Dumpke, the Employee Representative of UBS, is the next speaker, and we talked about this matter.
I would like to ask him to speak first, and if he has any questions related to that, I'll be coming back to this. This is what I wanted to answer to Mrs. Moser-Harder. Mr. Dumpke first. Mr. Chairman, members of the Executive Board, dear employees and shareholders, ladies and gentlemen. I'm standing here in front of you for the first time. For about a year, I've been the President of the Employees' Representation in Switzerland. Like many employees of UBS, I'm a shareholder of the bank, and I'm interested in the bank's economic success. As the Chairman of the Works Council or Employees' Representation, I am committed primarily to the interests of employees. It is my objective to preserve and improve working conditions.
The fact that I'm standing here today indicates that we have an excellent social partnership, excellent relations, which contributes to the success of the bank. Often, representation of employee interests is very difficult. Not all business decisions of the bank are in the interest of employees. At the end of the day, those decisions, in case of restructuring and transfer of workplaces, affect the fate of human beings, and the savings rounds in the past few years have led to job cuts and transfers, international transfers, and have made a lot of processes complicated and changed them. Work pressure has risen in many units, and work has become more challenging at the same time. Despite the excellent social scheme we have at UBS, those decisions are of an existential nature for those affected.
announcement of more savings of around CHF 300 million is a load on employees and their families. Fear of job cuts and of the future are great stressing factors in many areas. Dear members of the executive board, I would like to urge you to reconcile restructuring with social responsibility vis-à-vis those affected. The employees deserve it for their commitment and their longstanding loyalty to UBS. They deserve this kind of appreciation. Let me move on to talking about digitalization. Digitalization, that means intelligent, smart robots and automated devices present a big challenge for the banking industry. UBS is developing increasingly into a digital bank and offers excellent digital products serving the zeitgeist. A lot of work is done by means of smartphones today, which produces efficiency for the bank, but also introduces changes in the world of work. Work will change but not become less.
It will be a different type of work, and knowledge about banking processes, banking products, and advisory skills will continue to be required. Long-standing employees are worried about this process. They fear to lose their work and their jobs, but the use of long-standing employees will continue to be very valuable. They are the organizational capital. They are making available company-specific knowledge, and they ensure process experience. UBS relies and depends on such knowledge. Such knowledge cannot be replaced by machines. Ladies and gentlemen, let's take many employees on board the journey towards digitalization. It is important for UBS to invest in education and workability. As far as the employees are concerned, it is important that they take part in the changes to the world of work, and it takes courage to do that.
In recent years, UBS has invested a lot in continuing education and workability, and we appreciate that. As employees' representation, we hope that a lot of employees are encouraged to take part in the digital journey. Continuing education, workability, and awareness of employees of the digital world are very important. Furthermore, it is important for UBS to develop into a learning bank in terms of culture. This will be a crucial competitive edge. In Switzerland, equal rights of women is being discussed intensely. In the world of work, equal pay and discrimination are the talk of the town. Of course, UBS has been involved in those debates, and I demand that UBS satisfies the requirements for equal pay for equal work. This is absolutely necessary from an ethical point of view.
As in recent years, we believe the following will be important: preservation of workability of employees, expanding on the offer of continuing education, a commitment to Switzerland as a labor market, equal opportunity for everyone, social responsibility for employees with handicap, and offering a work setting that doesn't make people sick. In contact with employees, I meet highly motivated and committed persons who are managed by many good line managers. Together, my colleagues use excellence and their high-level skills to provide the best possible service to our clients. They contribute to the success of the bank. Their knowledge and experience cannot be replaced by machines. Digital processes are always based on human know-how, and the employees are the keys to success, and I would like to thank them today because banking is people. Thank you very much. Thank you, Mr. Dumpke.
Thank you also on my behalf for the constructive cooperation we have had, and I have personally had with you throughout the course of the year. You regularly meet with me, with the CEO, the members of the executive board, and we do appreciate this constructive cooperation and this type of social dialogue. Let me respond to some of the points you made. Like you, we believe that preservation or maintaining workability of our employees is key, and therefore, in cooperation with you as well, we go to great lengths to secure basic and continuing education for all employees, and I promise we're going to uphold this. Onto equal opportunity. We consider this to be a very key thing, and we're broadly based on diversity, and we believe that equal opportunity is important for everyone.
We must make sure it's a commitment, it's binding, that no one is discriminated against, and we ensure that for equal work and equal performance, equal pay is granted. Especially, we focus on equal pay between men and women. We've got robust processes and controls, and on the Corporate Culture and Responsibility Committee, we're looking very meticulously into the matter, also on the compensation committee. Non-discrimination, equal opportunity, and equal pay for equal work, and equal pay for equal performance between men and women are all important matters. Let me also mention, and getting back to what I said to Mrs. Moser-Harder earlier on regarding maternity and paternity leaves. Review of pay during maternity leave and paternity leave has shown that our controls are effective, and that there is no systematic discrimination. This is important in my mind because you have to counteract such rumors.
It would be an indication of bad management culture if there was such kind of discrimination. The employees have been encouraged, and we offered to them to report to HR and to get into contact with us if they feel treated unfairly as far as pay is concerned. I think you cannot produce more transparency. I promise to you that each and every case is reviewed by experts if it is brought to us, and should there be any deficiencies, they'll be remedied, they'll be corrected. That's a clear statement I can make. Analysis of cases so far has shown that as a general rule, bonus decisions were well-founded and were considered to be well-founded when reviewed. Maybe finally, you referred to protection at work or health and safety at work.
For us, this is very important to offer a healthy environment because that's the only possibility for us to offer appealing opportunities and good infrastructure for all employees, in particular, colleagues with a handicap. Let me also come back to refurbishment at Bahnhofstrasse again. We placed a particular focus on health and safety at work and accessibility of the historic building. Thank you very much again for your comments and for the great kind of cooperation we've had. Thank you very much
We come to Kazim Kustovitch from Vevey is the next person. Peter Fuhrimann from Bern is asked to stay put or stand by.
Monsieur le President, Monsieur le membre du conseil.
Chairman, members of the executive board, ladies and gentlemen. I have a few words to say about investment. Where should we invest without having to worry about the impact of our investments on the planet? We've invested a lot in countries which export oil. We know that oil reserves are not unlimited. Of course, in order to secure the future of future generations in those countries, money is required. The biggest oil exporting country in the Arab Peninsula is a country with a huge amount of social injustice. Although nobody's actually starving, unlike in Africa or in certain countries in Latin America, I'm thinking of Venezuela at the moment. Nevertheless Well, when you don't have obvious poverty, then things are not too bad. What will happen in these countries when oil runs out?
These countries need to start investing in farming, in irrigation, in desalination plants. They need to build new factories after a careful analysis of the market, of course. They need to take action to secure the future of the coming generations. At the moment in countries like Oman, very small country, of course. I've read that people have one of the highest standards of living in the entire world. I ask myself, what is going to happen to them when the oil runs out? We need to take action. These countries need to ensure that they invest in other areas so that their people will have a decent standard of living in the future, and not just now. Here's the question: How do we persuade people to invest responsibly over there? It's very, very difficult to achieve that.
Prior to leaving Yugoslavia 56 years ago now, and coming to Switzerland, which is what I did. It's over half a century now since I came to Switzerland in 1969. I lived in Tripoli and lived in Libya for five years. I got to understand the mentality of the people there. It seemed to be the case that it was rather difficult to get industry leaders to think about that major problem. Nevertheless, that's still what needs to be done. Thank you very much. Thank you very much. I certainly agree with what you've said about oil exporting countries needing to focus on diversification so that they are less dependent on oil and primary resources. As you do, I visit several countries in the Middle East each year, and I see just how important diversification away from oil is to the governments there.
There's lots going on in Dubai and Abu Dhabi. They're developing the tourism industry, the financial services industry as well. Countries like Saudi Arabia are also looking to develop into other areas, minerals and other raw materials are high on the agenda there. They certainly are well into diversification. Central banks, state funds and so on often come to meetings with us. They come to Davos as well, to the World Economic Forum, and I can assure you that the sort of thing that you are suggesting is very much present in their minds, at the forefront of their minds.
Peter Fuhrimann should please come to the podium, followed by Alois Severin . You should stand ready, sir, please. Ladies and gentlemen, on the 24th of April, the Tages-Anzeiger newspaper wrote that UBS has earned a lot less. Mr. Ermotti is optimistic, also talked about the difficult market conditions this year and talked about expectations having been exceeded. I'm optimistic too, actually, I can tell you. Who do we have to thank for this? You have to thank the UBS employees for this because they are on the front line. They have direct contact to us, to the customers at the counter, in the bank, and over the phone and in their offices. Of course, we don't see those people in the offices very often. You have all your strategists and the entire crew that is behind those on the podium today.
I'm a very small shareholder and my sympathy lies with the little people out there. Nevertheless, I would like to thank everybody very warmly, and I would welcome a round of applause. I have another topic which is a little less positive. In 2002, the chairman, Mr. Ospel, decided to declare his salary. He was the first to do so, it was CHF 12.5 million, people were shocked. Once Mr. Ospel stepped down in April 2008, I think there was a contribution made to his pension fund as well, if I remember correctly. If I think what Mr. Ospel must be costing the UBS pension fund every month these days, then I feel pretty sad actually, given the fact that this same pension fund recently cut the pension of a widow who had been married to an insured employee of the bank for over 40 years.
Her husband was 29 years older than her, and because of that age difference, the pension fund decided to cut her pension by 56%. In other words, the UBS pension fund cut her pension from CHF 3,200 a month down to CHF 1,400 a month, even though she had been married to that same man, that UBS employee, for 40 years. That really is an example of how marriage can bring you disadvantages, a great injustice. I've read that Mr. Ermotti is earning CHF 14.1 million for 2018, and when I read that, I couldn't help myself from doing a bit of maths. Let's assume that Mr. Ermotti works 12 hours a day, six days a week, doesn't take any holidays. He would work 3,744 hours a year. If he's earning CHF 40.1 million in the year, then his daily wage is over CHF 45,000.
An hourly rate of CHF 3,766 per minute, CHF 62.76, or CHF 1.05 per second. Ladies and gentlemen, believe me, I am happy with what I have, and I'm not jealous of anybody else's welfare or anybody else's wealth. As a former employee of a humanitarian organization, I must wonder, though, I must ask, is a daily wage of over CHF 45,000 a day, earned 312 days a year, is that ethical? Can you even support that in ethical terms? I would invite you to think about that, and I thank you for listening. Thank you, Mr. Fuhrimann. Thank you for
The praise that you have offered to our employees as Mr. Ermotti and I have done. It's extremely important that we thank our employees for what they do day after day for our customers, and I'm delighted to hear you're doing the same. Thank you as well for describing the case of the widowed lady. I can't comment on that specifically because I'm not fully familiar with the case, but we have a stable pension fund, which offers attractive benefits. If you provide us the names of the individuals concerned, then we will ensure that we look into the case and make sure that no incorrect decisions have been taken. I'd have to ask you to give me those names confidentially. Please don't do it publicly. I think it's better to do it confidentially. It's been made public. It was published by Kassensturz .
It's been on the radio. It's been in the press, so I think you ought to know. If you agree, we will provide you with information in writing. If you come again next year, then perhaps we can also talk about it publicly then. You talked about Mr. Ermotti's salary. I'd like to cover this in the general debate because we're going to come on to talk about compensation later. We're still talking about agenda item one, but if you will bear with us, then we will address your points later on. Thank you for your mathematical calculations right down to the pay per second. We'll look into that when we come onto the relevant agenda items. Alois Severin from Liebefeld is the next person on the list. Mr. Gerwin Berger from Dornach is next up after him. Ladies and gentlemen.
We've heard several times already today that UBS is leading the field in many areas. I think it's leading the field in the charges that it levies as well. Given the increasing amount of work that the customer is offloading onto the customer, we're more or less becoming home banks. I think it's unreasonable that the bank should not reduce some of these charges for its depositors. We really need to think about this, I believe. Until I looked into this more closely, I didn't realize that there's a real correlation between fees and dividends. For a small shareholder, as I am, holding about 250,000 of deposits, the charges that I have to pay for just the very cheapest arrangement, where you don't get any advice or anything, it more or less eats up the dividends.
The charges I pay cancel out the dividends, so the money remains with UBS, really, and I come away empty-handed. I therefore suggest the following. For its small shareholders, UBS should introduce a new model of charges for these small shareholders, lower charges. I would invite you to look at my proposal. Otherwise, you could all transfer your holdings, move them somewhere else, move your assets to the Raiffeisenbank , to the Post Office Bank, or to Migros Bank. Although you'll pay CHF 100 in transfer charges. Anyway, I think you need to protect yourselves. There's another point I want to raise as well, because you're a leader, at least in Switzerland. You're a leader when it comes to bonuses for your executives. This has been raised several times already today. Mr. Ermotti and Mr. Weber earn more than anybody should earn by going to work.
It's simply not acceptable. It's way out of all proportion. It's like a sort of self-service arrangement where you just take as much money out of the till as you want to. I've wondered about this. Why is it like this? I don't think it's the remuneration system that's at fault. What's lacking is measurable objectives which can actually make a difference. The objectives which these gentlemen are supposed to achieve during the financial year should be combined with or should be offset by malus in order to offset the bonus. Let's say if during the financial year the bank has another fine issued to it, then the bonus of the executive and the chairman should be halved, and that process would repeat every time a fine of more than 1 million is handed down. Your bonus would be cut and cut as far as necessary.
Then, maybe at the end of the day, you'll be so poor that you'll have to go to the state for handouts. You'll find yourselves penniless in the streets. So I have my proposal. Let's see whether we can get the share price up to CHF 20 per share. Let's make that an objective. If it's not, if you don't achieve that, then Mr. Weber and Mr. Ermotti should each pay out CHF 100,000 for share buybacks. That would be my proposal, and I think it would be one that would really work. It would really have an effect, because it would mean that you were personally making a contribution to dealing with the situation if your annual objectives are not attained. Thank you. Thank you, sir. Well, you've done a little bit of advertising for the competition here at the AGM.
I won't repeat the names of the banks that you mentioned. I would invite other speakers to desist from inviting shareholders to go elsewhere because we are Switzerland's leading bank after all. Our compensation report says this in different words, but basically what you said about compensation and what happens when the bank gets fined is in fact reflected in our compensation model. There's a qualification there. The fine handed down in France, which relates to a period prior to our tenure, does not feature in our remuneration or compensation model because it's not something that we could have influenced. But in the seven or eight years that the executive board, Mr. Ermotti and myself, have been in place, our compensation model has been altered such that any events for which we are responsible have an effect on our deferred payment.
Payment is deferred for five years, particularly if such events affect the profitability and the profits of the bank in the future. So your idea of there being repercussions if something happens of that nature is indeed something that's already reflected in our remuneration model. Perhaps the language used in the remuneration report is rather technical, and that message does not come through, but it is indeed the case. Secondly, let me reassure you that every tranche, all of the seven tranches of our remuneration held in the form of deferred shares, of course, has also dropped in value along with the share price. It's what I meant at the outset. We are just as much affected by changes in share price as you are, and that is rightly so.
We bear responsibility, and the development of the value of the bank and its profitability and its equity is something that we focus on very strongly, and we will come onto that in forthcoming agenda items. We have Mr. Greenberger from Dornach next on the list, followed by Mr. Riccardo Pacifico from Neuchatel. Thank you.
Good afternoon. I'm a computer scientist. I wrote software and some of them ran for 30 years with UBS. 30 years is a long time in computer science, and I can say that I have made my little contribution to the growth of UBS. This is about growth. Die Weltwoche magazine published a letter that I wrote to them coincidentally, and it was in response to an article about why capitalism is doomed to promote growth. I wrote the letter at the time. An important cause was not mentioned in the article, and this cause was the demographic rifts that are getting ever larger. For instance, in South Korea, the birth rate is at 0.98%, whereas in Niger, the African state of Niger, the population will multiply by four by 2050.
There is halving on the one hand and fourfold development on the other hand, all in a single generation. On the other hand, we have enormous competition that drives businesses to growth, but hardly offers perspectives or opportunities for families with children. We should recognize the richness of having children, but on the other hand, having a family drives people to consume more. We need an approach to bridging the rifts. For instance, by considering ourselves as visitors to this nice planet, who are allowed to enjoy the miracles and wonders of the planet, we ought to be grateful and make sure that the next visitors can enjoy the same miracles as we have. We need to preserve them. We need to point our fingers to reality.
We shouldn't behave like someone who is looking for a solution where there is more light, although they've lost the key in the dark. We shouldn't live by the maxim of— Well, Helmut Qualtinger's maxim, actually. "I've no idea," he said. It was from one of his stage performances. "I've no idea where I'm going on my bike, but my motorbike is quicker." What we need to do is we need to think of the future. I wrote a book about this, but you can't really see it. Well, you can read more about it in this book. That's it. Thank you very much. Well, fundamentally, what you said, I can fully agree to. I said it in my presentation, future growth in business and the banking industry in particular, and in UBS, is possible only if we deal responsibly with nature, human beings, and society.
We've been doing this for many years. Let me emphasize once more that we're using innovative things like those ribbons that I've shown to you, and the sales proceeds from those ribbons feeds into the UN campaigns, the UBS Optimus Foundation. By the way, that's the UBS charity organization, headed by our CEO, Sergio Ermotti, and considers how these proceeds are used for the benefit of UN sustainability goals. We're very active in this field. Next speaker is Mr. Riccardo Pacifico from Neuchatel, and then Mr. Sebastian Röthges has spoken before to be the final speaker. He's coming back to follow up with a question. I'll ask him to be brief. Mr. Pacifico, please.
Well, first of all, I'd like to highlight the following. I have confidence in this bank. I think there are many shareholders here today, and they have confidence as well. I'm grateful to Mr. Weber for his authority and the professionalism with which he leads this bank. Now, words have a clear meaning, and that is why I'm speaking in my mother tongue today, which is Italian. I can say exactly what I want to. You talked about appropriation of earnings to shareholders, and you talked about the variable compensation of the management team and the board of directors. Well, how about we make this 50/50? How about you look to a share buyback? You've talked about that as well. Although we don't have anything specific in writing. I haven't really found much information about your share buyback.
What would be the price there for the share buyback over the period that you've mentioned? You seem to be thinking that the price would be above the current share price, so you'd be buying back shares at a value higher than their current value on the stock market. What does that mean for shareholders then? What does it mean for us if these shares have been bought back? Secondly, what does the board of directors actually intend to do with the shares that you bought back? I want to come on to the matter of the financing of the oil industry and the arms industry. There's a clear conflict of interest here. The bank seems to have two hands, one hand that hands out investment, and the other hand which looks at sustainability.
Of course, the bank also wants to make money while it's investing in industries which don't necessarily protect the environment. Of course, this is a balancing act. It's difficult to get it right. We hear you say that you analyze all your projects and see how sustainable they are, but this is something I really want to pick up on. You talked about renewal within the bank, I'm pleased to hear that word, but what does it actually mean? What will it bring us in the future? You want to see the bigger picture, the long-term picture. That's all fine and well. Let's hope we can see earnings and wealth on the horizon. That's just a material value, isn't it? I think this bank also needs to achieve wealth of a different type, in a more honorable manner.
Let's, on that point, look to the bonuses which are quite ridiculous, I believe. Sinful, if you want to look at it from a religious point of view. You've talked about the model for your bonuses. It's very complicated. Of course, you know it like the back of your hand yourselves, and you know precisely how your bonuses have been calculated. Your mathematical method only stands up, though, to a certain point. It needs to have a proper foundation below it. You build up your model and then you end up with these huge bonuses. The system has to constantly be checked out, I think, which I'm sure is done by somebody who's very clever and knows precisely what they're doing. The model that you have means that you're earning an incredible amount of money every day in a way which is not sustainable at all.
You need some sort of limitation applied. This comes down to your own personal responsibility, I believe. Mr. Ermotti has stated here that it's the shareholders who decide on compensation at the end of the day, but let's be aware that the particular vote he's referring to is only an advisory one. Shareholders can vote however they like. It doesn't have a binding effect. It's a bit like being asked to vote on something that doesn't matter anymore. Under fascism in Italy, we couldn't vote. When we got the vote afterwards, there was no point voting on it anymore. We know that's just how it is, whether you like it or not. These votes are meaningless. You talked about the bank being internationally well-placed. Sure it is. Nevertheless, you are a Swiss bank, and these massive salaries that you're receiving are Swiss salaries.
You are a Swiss bank after all, you should receive Swiss levels of pay and not American levels of pay. You know how things are in the U.S. and their attitude to pay. A final question, if I may, which I think brings me to the real heart of the matter, because somebody says one thing, somebody else contradicts it with something else. Axel Weber has talked about the lawsuit in France, about the trial in France, and said some things which I found quite unacceptable, actually. You said there was no settlement on the table, an out-of-court settlement. Well, was there or wasn't there? Someone said there was, others have said there wasn't. I'd like to know precisely what happened, and how close were you to achieving that settlement? Another question to Mr. Ermotti. Sorry, is there a problem out there? I'm nearly done.
Mr. Ermotti complained that the Swiss government doesn't support the bank. Well, thank goodness the government doesn't support the bank. Thank goodness Switzerland, or the government didn't get involved in the trial. I think the Swiss government has enough to do with Europe, our European neighbors at the moment, without adding anything else to their list of things to do. It was up to the French courts to decide. Of course, the courts are very closely linked to the government in France. A solution has been found. I guess it was a pragmatic solution. Yes. I'm very sorry for taking up so much of your time. Thank you for listening.
Thank you, Mr. Pacifico. I'm taking up three subject matters from your statement. One thing is you asked about the vote, and you said it's a non-binding one. That's not correct. The vote you're going to have about compensation matters today, there's two parts to it. One is an advisory vote on the compensation model. That is advisory, and it's non-binding, but it's our compensation model and application of the model and concrete payments, in particular, the variable payments against the background of the last year. That is a binding vote, and that is exactly the right shareholders have had since the Swiss Code of Obligations has been amended. Just to be precise. At the end of your statement, you refer to the share buyback program. Let me pass the floor to Mr. Ermotti quickly. He mentioned it, last year, we bought back CHF 750 million worth of shares.
He can tell you when we did so and how it was distributed across the year. It's always meaningful to carry out share buybacks when the book value and the share price are in a relation that the book value is higher than the share price. That has implications for the futures, because there will be less shares in the market in circulation. Markus Diethelm perhaps can comment on the settlement, and he did so before. Maybe he can repeat it. You asked the question in this regard, or you seem to have not fully understood what he presented earlier on. I would like to have that repeat. Sergio, on the share buyback program. Mr. Pacifico, the number of shares bought back was CHF 740 million worth of shares at a price of CHF 15.5. That meant that these shares were withdrawn from the market.
These are treasury shares now held by the bank. For the shareholders, this means a profit, because the distribution, the payout is higher. Technically speaking, shareholders have a benefit from the share buyback. I hope that this has been clear. Thank you. Markkus?
The question pointed to the possibility of a settlement in France. Let me say that before the new law was introduced, the deferred agreement, it was not possible in France as a company to have a settlement without accepting guilt. As we were not aware of being guilty, as we had complied with Swiss, French, and European law based on the state agreement I mentioned earlier, it was not a real option. The discussions took place in 2014. As you know, a former minister of finance in France was taken to court because of a settlement, and we considered it impossible to accept a settlement. Following the introduction of the new law, and the possibility of a settlement after that, I spoke to before, and the figures we were talking about were in no relation whatsoever with any settlement in the interest of shareholders.
We continued to believe that a court case, the base, will be ruled on the basis of justice. Unfortunately, we didn't manage to get to this point in the first court, and we are taking the matter to a court of appeal. Of course, there is this European contract recognizing that there were non-declared assets. The German Minister of Finance, Hans Eichel, referred to that in 1999 and 2004. It was presented as a model prior to the automatic exchange of information. This has to be talked about. The French court
We'll have to go by the European legislation in good faith, and we're going to take the matter perhaps even to a European court if necessary. Thank you very much. Thank you, Markus and Sergio. No one else has signed up to speak. We only have a request from someone who has spoken before, Mr. Sebastian Röthges. The request for a follow-up question, I allow for it, but I would like to ask you to be brief. You will have noticed that the sentiment in the hall, the shareholders want to move on to the vote. Please go ahead with your follow-up question, but I'll ask you to be brief. Thank you, Mr. Weber. It's certainly not my objective to have people against me from the hall. I would have to think about how to get back to Germany.
Thank you very much for your offer to talk to Urgewald, to my institution. We'll see how we can perhaps make an appointment with you. Maybe we would have to think about making a knot in the handkerchief. That would be all confusing, but could I ask you to meet me quickly so that I don't have to come back next year to complain about not having any appointment with you? I have two follow-up questions, and certainly this should be talked about in details, but maybe we can expect a quick answer from you. One thing I asked was whether the executive board read the IPCC's report on 1.5 degrees and what conclusions you arrived at. Maybe you would even want to do that. Yet the urgency of the report, I think everyone's hopefully familiar with, and for future business decisions, you cannot simply ignore that.
Second point is in regard to coal dependency. You answered to some other speakers that you're only funding businesses that have to be below 30% of dependency. But what does that mean specifically? I talk about power production or what criterion counts for that. Now I know that you do not talk about individual clients. RWE, however, continues to be an important client of UBS, had a share of coal of 45%, and is a far cry from the 30% criteria, and RWE has produced from renewable sources to the tune of 5.6%. So I don't really know how you reconcile that. All those ribbons that you referred to. Well, fair enough. But I think there's a huge gap between diesel initiatives on the one hand and continued investments in companies like RWE and the other. Thank you. Well, let me reiterate.
All relevant reports, not only the one that you referred to, are part of the CCRC, our committee's debates, and headed by myself. We also have Christian Bluhm, our Chief Risk Officer on the committee. He's in charge of Global and Environmental and Social Risk Committee with nine members from the executive board. We regularly deal with climate as an issue. We've got our climate objectives and climate strategies deliberated there, and the meetings are as regular, eight times a year, as all the other board committee meetings, and all climate relevant reporting is taken into account there. I also chair the International Banking Association, and we are founding a climate task force to work with the public sector to approach that from top-down. We've got a task force there that we are converting.
Rest assured that not only the climate report you referred to, but all climate reports are taken into account in those bodies, in our discussions and on RWE. As we said, we won't comment on specific clients. I believe the biggest thing, and this is certainly something, a take-home message for you, Germany will have to work on its climate strategy. Among many German politicians, in particular in North Rhine-Westphalia, they tend to be focused on coal extraction as a form of energy, and that has been dropped in many countries in the world. Switzerland has very much focused its energy balance on renewable energies and hydropower, and we're a company that uses renewable energy for power consumption. And Switzerland internationally, and also based on its geological and geographic situation, is one of the few countries that can be at the leading edge.
As a Swiss company working out of Switzerland, we can only call upon everyone else to join us. Climate is a big issue at our bank, as I said before, because we notice in Switzerland day by day what impact climate has on the territory here. I don't need a second knot in my handkerchief for your appointment. I know that the invitation to you has already been submitted to your organization. I'm looking forward to meeting you in Zurich. Yes, please. How do you define coal dependency? You haven't stated about that yet. It's a very technical matter, and we ought to be doing that in our conversation with our experts. I would assume that the response from the hall is that we should do that bilaterally rather than here on the podium.
As no one else has signed up to speak on this item, let's proceed to the vote. The discussion on item one is closed. I would assume that a lot of things have been debated already, a lot of the things that will come up again when voting on compensation. I note that Ernst & Young, the auditors, recommend that the consolidated and standalone financial statements of UBS Group AG for the 2018 financial year be approved. The reports that do not include any reservations can be found in the financial information and have been available at UBS offices. I would now like to ask Markus Baumann, our company secretary, to explain to you the voting devices before this first electronic vote. If you have any questions about them, we'll be pleased to repeat. There are help desks in the hall.
Should you be unable to handle your voting device, you can go and ask them. Dear shareholders, many of you are familiar with our voting devices. I'll try and be brief. As soon as a new vote is opened, a new ballot is opened, the screen will go on automatically. It will be dimmed after three minutes and go dark after two more minutes. By touching the touch screen or pressing the button, the red button on the side, you can always reactivate the screen. Under the Sprache tag, you can change languages. Under the Meine Wahl tag, you can check how you voted on the individual items. Under Info, the Info tag, you can go through your personal shareholders information and see how many votes you represent. Just before the ballot is opened, an agenda item will be shown on your display.
If you touch the green field on your screen, you will be voting yes. Touching the red field, you will be voting no. With the amber field, you'll be abstaining from voting. As soon as you have pressed a field, the system will vibrate to confirm. There'll be a tick at the field that you have chosen. The fields that you've not chosen will be dimmed. If you have chosen the wrong field, you can press the one you wish to choose while the clock is running down. As soon as the clock has run down, you cannot correct your vote anymore. At the end of the voting time, the screen will show what you have elected. Let's proceed to the vote on item one.
The Board of Directors proposes that the management report for the 2018 financial year and the consolidated and standalone financial statements for UBS Group AG for the 2018 financial year be approved. The first ballot is open. The usual time of 10 seconds runs from this very moment. Cast your vote. Time is up. It will take a few moments for the results to be displayed on the screen behind me. As you can see from the results on the screen, 99% of the votes are in favor and 0.74% against the board's proposal. The annual general meeting thus has approved the board's proposal on item one. Moving on to item two, the advisory vote on the UBS Group AG compensation report for 2018. Dear shareholders, your views, your suggestions, and questions regarding compensation are greatly important to us.
We want to have regular exchange with our shareholders on the developments and trends in the field of compensation and corporate governance. This dialogue was conducted intensely in 2018 and has left its mark on our review of the compensation structure. Based on our exchange with our shareholders, we have also improved the structure and parts of our compensation report. In particular, the introduction of new sections, such as performance and compensation at a glance and shareholders' engagements and say on pay, contribute to making the report a better read and increasing transparency. We are convinced that our compensation philosophy and the compensation structure based on it considerably supports our strategy and embeds our culture in our business. This is a proven approach which has remained widely unchanged since 2012. Let me point out three essential aspects of it.
First of all, a strong culture is a prerequisite for us to produce excellent performance. The compensation system and appraisal of compensation of each and every employee builds on our system of three keys to success. These include our pillars, principles, and behaviors that we defined six years ago. In the meantime, they have become well embedded in the bank. The three keys to success are the foundation for assessment of compensation. In appraising performance, we do not only take into account the results achieved, but how they were achieved as well. We reward those employees who do the right thing, who cooperate across units and identify opportunities and risks and openly address them, and we penalize behaviors that are not in agreement with our values. Secondly, allocation of variable compensation primarily depends on the operating result in the year under review.
The compensation committee, therefore, takes into account, in its decisions, factors that have an impact on UBS's total result, the quality of the results, performance in a peer comparison, and financial viability and competitiveness of compensation. As I mentioned, for many employees, a considerable share of variable compensation is deferred for up to five years, and in particular, the high share of share allocations create direct links with the development of the share price. This brings interests of employees very much in line with interests of investors and clients. Thirdly, the transfer of deferred allocations depends for certain employees on whether the minimum performance thresholds are met for a period of several years, not only in one particular year. The thresholds are defined such that they support the long-term and sustainable quality of our annual results.
Profit-driven thinking to the detriment of long-term performance is to be avoided as a result. Esteemed shareholders, you will have an opportunity to vote on the UBS Group AG's 2018 compensation report and the compensation model in an advisory vote. This advisory vote reflects our efforts geared towards transparency and code determination by shareholders. It is complemented by the votes on compensation for the Board of Directors and the Executive Board. We're pleased, we're grateful if you participate, because the outcome of the vote shows us whether you agree to our compensation practices and governance in 2018. The floor is open for a debate. The first person who's signed up is Mr. Bruno Bürgli from Oberengstringen. May I ask Mr. Germain Mittas from Dättlikon to stand by as the second person to speak on this item.
Dear shareholders, I would like to ask you to reflect whether such an antisocial Board of Directors and Executive Board are acceptable for UBS. The largest DAX company gets just under half of the compensation that UBS gets. Antisocial, I think, is to pay out huge bonuses and to cut the 13th monthly salary by 50% for those who earn much less. That doesn't speak for social skills, social competencies. I would like to ask you to say no to all the compensation votes. Thank you very much for your attention. Mr. Germain Mittas from Dättlikon is the next speaker. Mr. Chairman, members of the Executive Board, ladies and gentlemen, shareholders. My name is Mittas Germain. Please take note, Mr. Weber. I'm from the French-speaking part of Switzerland, but I've been living in the region of Zurich for a long time.
For more than 60 years, I've been a client of UBS's, and in this period of time, for 50 years, I was convinced of this bank, and in recent years, I don't know whether this is due to my age, my trust has been shattered. You know why, Mr. Chairman? You're doing a good job of chairing the meeting. I congratulate you, but Mr. Ermotti has not been convincing to me. First of all, I thought, well, is this a sales meeting? Have I ended up in a sales meeting? Secondly, well, it's an umbrella meeting. Why? Because Mr. Ermotti emphasized the things that we're doing well and attributed all the problems to external factors, but that's not quite so. You mentioned development at the stock exchange, but that is an indication of trust and not of the 1,000 people here, but of millions of people.
Please take note of it. Now, on bonus payments. Fundamentally, I'm not against bonus payments, but what I criticize is the amount of bonuses. Mr. Ermotti, for a period of 12 months, you are making as much as 120 worst paid employees in the bank or a sales clerk who begins work on 3rd of January, has to work until 31st of December until she earns as much as you have earned by the end of the 3rd of January. Is this socially compatible? This is why we're saying no on those votes. We heard that UBS recruits consultants to, well, armies of highly skilled mathematicians and so on to look into the compensation model, who go try and find criteria. But that's not in line with the world today. We want more justice.
Please, ladies and gentlemen, I know we're not going to get a majority, but please say no on the compensation votes. Thank you very much. Well, I have heard that you come from the French-speaking part of Switzerland, but you were indicated to me as someone from Dättlikon. I'm sorry about that. Actually, I didn't hear any questions from the two speakers. You simply requested or urged to say no to compensation votes proposal. Let me just mention one point that in response to Mr. Mittas, well, we will do everything to regain the trust that we may have lost. We admit that last year, in particular, the France issue constituted a setback. Mr. Sergio Ermotti and myself are quite open about this, we clearly stated it also in our interview we gave, and we consider this to be a setback.
Clearly, at the same time, we are encouraged by it to look into the matter and defend our position and to regain trust where it may have been lost. As no one else has signed up, I herewith close the debate on item 2, this brings us on to the advisory vote. The board of directors proposes that the UBS Group AG compensation report for 2018 be ratified in an advisory vote. I herewith open the ballot. Voting time runs from now. Please cast your vote. Time is up. Bear with me until the results are shown on the screen behind me. As you can see from the results shown on screen, the share of yes votes is 79.4% versus 20.3% of no votes. The annual general meeting thus has approved the 2018 compensation report of UBS and clearly approved it.
Dear shareholders, we have also seen that the turnout of yes votes has been lower than in recent years. Disappointment with the stock performance has certainly left its mark on the outcome of this vote, as well as the case in France. We will take this as an opportunity to, again, review carefully our compensation model in the current year and to adjust it if necessary, especially against the background that approval has decreased compared to the earlier year, the year before. Moving on to agenda item 3, appropriation of total available earnings and distribution of ordinary dividend out of capital contribution reserve. Starting with item 3.1, appropriation of total profit. On the basis of the standalone financial statement, the profit of UBS Group AG for the 2018 financial year was $3.171 billion or CHF 3.111 billion.
The board of directors proposes that this amount be fully
Transferred to the reserves, appropriated to the voluntary earnings reserve. We will carry on to the next point, agenda item four, distribution of ordinary dividend out of capital contribution reserves. We will vote in a single round. On the basis of the reported profits, the board of directors proposes payment of an ordinary dividend of CHF 0.70 per share. Since this dividend will be paid out of the capital contribution reserve, it is free of withholding tax, if the shares are held by private individuals resident in Switzerland, it is also free of income tax. All other people, individuals, including legal entities, persons residing outside of Switzerland, and persons holding their shares as part of their business assets, should please clarify their tax liability personally.
As stated in the invitation to the AGM, we propose to cap the total dividend amount at $3.55 billion. Given the current share price, it's not necessary to vote on this cap because no capital maintenance provisions are infringed here. Holding a vote for you to approve this technical cap is therefore not necessary today. I'd like to open the floor for discussion on agenda items 3.1 and 3.2. I don't see from my monitor that anybody has registered to speak on this item, which means that we can proceed directly to the vote. I officially close discussion on these two points. We will vote on points 3.1 and 3.2. The board of directors proposes that the available profits of CHF 3.111 billion be appropriated entirely to the voluntary earnings reserve.
The board of directors also proposes the payment of an ordinary dividend of CHF 0.70 in cash per share with a par value of CHF 0.10 from the capital contribution reserve. We will carry out both these votes in one round of voting using your televoting device. You'll see both agenda items on your screen when the voting time begins. You will have 12 seconds in which to cast your vote. The voting time begins now. As you can see from the screen, 99.67% of the votes are in favor of the appropriation of available earnings. 99.74% of the votes are in favor of the payment of an ordinary dividend from capital contribution reserves. Thank you. The AGM has therefore approved both proposals of the board of directors.
We proceed to agenda item four, discharge of the members of the board of directors and the group executive board for the financial year 2018. The board of directors proposes that the discharge of the members of the board of directors and the group executive board for the financial year 2018 be granted. The names of the people who served on the board of directors or the group executive board of UBS Group AG during 2018 and upon whose grant of discharge you're called upon to vote are shown on the screen behind me. I'd like to open the floor for discussion on agenda item four. I have one person. Mr. Riccardo Pacifico has said that he would like to take the floor again. Please keep it brief, sir, if you would. Well, I'll be very brief this time. I'll speak French.
You didn't explain what was going to happen with the shares that you're buying back. They go into the ownership of the bank then. What happens then with treasury shares, which is what they become after the buyback? Presumably, they don't receive any dividend, if I've understood correctly. Neither do shares do not carry any vote. Neither do shares held by members of the Group Executive Board and the Board of Directors. I will come back to that when we get to that point. It's very clear, treasury shares held by UBS, for example, those shares bought back in the share buyback program, don't receive a dividend. The same goes for this point about the discharge. They don't command a vote. Asset Management votes independently. That is not carried out by the Group Executive Board. They have their own board for that. Thank you.
I will close the floor for discussion on agenda item four. We can proceed to the vote. Members of the Board of Directors and the Group Executive Board of UBS Group AG are, of course, not allowed to vote on this agenda item. The Board of Directors proposes that the discharge of the members of the Board of Directors and the Group Executive Board for financial year 2018 be granted. Voting time begins now. Time is up, and the results will appear on the screen in a moment. As you can see from the screen, 41.67% of the votes are in favor. 41.64% of the votes are against the motion of the Board of Directors, with 16.69% abstentions. It's very marginal, but we have more votes in favor than against the discharge. We haven't achieved the necessary majority of 50%.
We have to consider that you have rejected the proposal of the board. I interpret this decision to mean that you are concerned about the ongoing legal proceedings in France, and you wish to keep open all possible legal routes. Naturally, I understand your position. Allow me to make a personal comment. From the point of view of today's leadership of the bank, this case, of course, goes back to the time before we were leading the bank, and we can only judge it on the basis of the information available. It is our belief that UBS did not break any rules in France or in Switzerland during the period concerned. As I said in my speech at the outset, it wasn't possible to achieve an out-of-court settlement for the case in France, and that is why we decided to defend the bank before the courts.
We believe that that is in the best interests of the shareholders. Allow me to add as well, particularly when it comes to building up reserves, we have always ensured that we met the highest legal and regulatory standards. We will continue along this path, and at the same time, remain in dialogue with you, our shareholders. We can move on then to agenda item five, reelection of the members of the Board of Directors. Board of Directors serve for one year at a time. Therefore, those who are standing for reelections need to be reappointed. I'd like to thank all the colleagues who are standing for reelection. It's a lot of work and you bear a great deal of responsibility, and it's not a foregone conclusion that you would stand again.
Before we come to the re-elections, there are two colleagues to whom we have to say goodbye. Anne Godbehere was elected to the Board of Directors 10 years ago, and is not standing for re-election this time around. For eight years, she chaired the Compensation Committee, and for 10 years, she was a member of the Audit Committee. We will miss Anne Godbehere's broad experience and the excellent work that she's done for the Board of Directors. She has supported the Board of Directors, and me in particular, with some very important suggestions and a lot of energy in her function as Chair of the Compensation Committee. She played a major role in setting out our compensation model. Thank you very much to you, Anne, for all your hard work. Michel Demaré is also not standing for re-election to the Board of Directors today.
He was also first elected 10 years ago, and he became Vice Chairman in the spring of 2010. He was a member of the Audit Committee for 10 years, a member of the Governance Nominating Committee for nine years, and since 2013, he's also been a member of the Compensation Committee. In these committees and in his role as independent Vice Chairman, Michel Demaré has always been a key member and has done a great deal to enhance the professionalism of the Board of Directors. The Board of Directors and I personally have greatly benefited from his experience in the various sectors in which he's a specialist. Thank you very much to you as well, Michel.
As I say, my colleagues on the Board and I thank Anne Godbehere here and Michel Demaré for their very valuable contribution over the last 10 years through a challenging period in the history of UBS, and we wish both of you all the very best for the future. We will now proceed to briefly introduce to you the candidates who are standing for re-election as members of the Board of Directors. Their detailed CVs and details of their mandates in stock-listed and non-stock-listed corporations can be found in the annual report beginning at page 338 in the German version. Following the re-elections to the Board of Directors and new elections, as well as elections to the Compensation Committee, we will open the floor for discussion, and then we will have a discussion on those points. We'll vote separately on agenda items five, six, and seven.
I'll start by giving the floor to Michel Demaré to handle agenda item 5.1. Thank you, Chairman. This is an emotional moment for me. It's the final few moments of my role as Vice Chair of the Board of Directors. My last opportunity to say a few words in French during the AGM. I'd like to thank you very much, ladies and gentlemen, shareholders, for your support over the years. I appreciated it a lot. Thank you very much. Axel Weber's mandate comes to a close at the end of today's AGM, and he is standing again for re-election to the Board. As Chairman of the Board, he was elected four and a half years ago. If he is re-elected, he will once again chair the Governance and Nominating Committee and the Corporate Culture and Responsibility Committee.
The board of directors is delighted that Axel Weber is prepared to continue to serve as chairman of the board and therefore recommends his re-election today. Thank you. Thank you, Michel. Moving on to agenda item 5.2, re-election of David Sidwell. David Sidwell was elected to the board of directors of the UBS Group AG four and a half years ago. If re-elected, he will once again be the senior independent director, and will also become vice chairman. He would remain chairman of the risk committee and a member of the governance and nominating committee. Agenda item 5.3 concerns the re-election of Jeremy Anderson, who joined the board of directors of the UBS Group AG one year ago.
If re-elected, he will remain as chairman of the audit committee and a member of the Corporate Culture and Responsibility Committee. Additionally, he will become a member of the governance and nominating committee. Agenda item 5.4 concerns the re-election of Reto Francioni. Reto Francioni was elected to the board of directors of the UBS Group AG four and a half years ago. If re-elected, he will remain a member of the Corporate Culture and Responsibility and the risk committees. His election to the compensation committee comes under agenda item 7.3 in a moment. Agenda item 5.5 is the re-election of Fred Hu, who was elected to the board of directors one year ago. We'll handle his election to the compensation committee under agenda item 7.4. Moving on to agenda item 5.6, re-election of Julie Richardson.
Julie Richardson was elected to the board of directors of the UBS Group AG two years ago. If re-elected today, she will remain a member of the risk committee. She will also become a member of the governance and nominating committee, and we'll deal with her election to the compensation committee under agenda item 7.1. Moving on to item 5.7, the re-election of Isabelle Romy. Isabelle Romy was elected to the board of directors of the UBS Group AG four and a half years ago. If re-elected today, she will remain a member of the audit and governance committee and the nominating committee. 5.8 is the re-election of Robert Scully, who was elected to the board of directors of the UBS Group AG three years ago. If re-elected today, will remain a member of the risk committee. Agenda item 5.9, re-election of Beatrice Weder di Mauro.
Beatrice Weder di Mauro was elected to the board of directors of UBS Group AG four and a half years ago. If re-elected today, she will remain a member of the audit and Corporate Culture and Responsibility Committee. Next comes agenda item 5.10, re-election of Dieter Wemmer. Dieter Wemmer joined the board of UBS Group AG three years ago. If re-elected today, he will become a member of the audit committee. His election as a member of the Compensation Committee will be dealt with under agenda item 7.2. Board of Directors is delighted that these individuals have already told us that they are willing to continue in their role as independent members of the Board of Directors. Let's move on to agenda item six, election of new members of the Board of Directors. Let me introduce the two candidates, William Dudley and Jeanette Wong.
Beginning with agenda item 6.1 concerning the election of William Dudley. William Dudley was born in 1953 and is a U.S. citizen. He holds a bachelor's degree from the New College of Florida and a doctorate in economics from the University of California, Berkeley, which he achieved in 1982. From 1983 to 1986, he worked for J.P. Morgan Guaranty Trust Company, U.S., before moving to Goldman Sachs in 1986, where from then until 2006, he held various leading managerial positions, including Partner, Managing Director, and for a decade, he was also Chief U.S. Economist. Between 2007 and 2018, William Dudley worked for the Federal Reserve Bank of New York. From 2007 to 2009, he was Executive Vice President and head of Markets Group there. From 2009 until 2018, he was Chief Executive Officer of the New York Federal Reserve Bank.
From 2009 to 2012, he also served as Chairman of the former Committee on Payment and Settlement Systems at the Bank for International Settlements. In 2012, he became Chairman of the Committee on the Global Financial System of the Bank for International Settlements. Additionally, he served as Vice Chairman and standing member of the Federal Open Market Committee of the U.S. Federal Reserve. William Dudley is currently a senior research scholar at the Griswold Center for Economic Policy Studies at Princeton University. He is a member of the Group of 30 and the Council on Foreign Relations. The Board of Directors is delighted that William Dudley is willing to join the Board. We are delighted to have such an experienced and proven financial expert as a new member of our Board of Directors.
He has outstanding knowledge of economic, regulatory, and monetary policy issues, as well as a lot of experience from his time in the financial services sector. The Board of Directors intends to appoint William Dudley as a member of the Risk Committee and as a member of the Corporate Culture and Responsibility Committee. Next item is agenda item 6.2 concerning the election of Jeanette Wong. Jeanette Wong was born in 1960 and is a citizen of Singapore. She holds an MBA from the University of Chicago and a bachelor's in economics from the National University of Singapore. For over 30 years, Jeanette Wong held senior managerial positions in the financial sector in Singapore. She began her career at Banque Paribas in 1982 before moving to Citibank. From 1986 to 2002, 16 years, in other words, she was employed at J.P.
Morgan and was involved in building up business in Asia and in emerging markets. In 2003, she moved to the DBS Group, where she held the position of CFO from 2003 until 2008. From 2008 until March 2019, she was member of the Group Executive Board for institutional banking clients, including corporate banking, global transaction services, strategic advisory, and mergers and acquisitions. Jeanette Wong also serves on the Board of Directors of Essilor, the Jurong Town Corporation, and PSA International. She is a member of the Board of Directors of FFMC Holdings Property Limited and Fullerton Fund Management Company Limited. Jeanette Wong is also a member of the Securities Industry Council. The Board of Directors is delighted that Jeanette Wong is willing to join our Board of Directors.
We are proud to present to you such an experienced and proven economist and expert in the financial industry as a new member of our Board of Directors. Her connections to and within Asia and her expertise in the banking sector will very well complement the expertise that we currently have on the board, the board intends to appoint Jeanette Wong as a member of the audit committee. We can move on to agenda item seven, the election of members of the Compensation Committee. The board proposes that Julie Richardson and Dieter Wemmer be reelected to the Compensation Committee for a period of one year, that Reto Francioni and Fred Hu be appointed as new members of the Compensation Committee.
I don't have anybody wishing to take floor on this agenda item, I can therefore close the floor and proceed to the vote on agenda items five, six, and seven. We will start with items 5.1 through 5.10. We propose that David Sidwell, Jeremy Anderson, Reto Francioni, Fred Hu, Julie Richardson, Isabelle Romy, Robert Scully, Beatrice Weder di Mauro, and Dieter Wemmer be appointed as members of the Board of Directors and that I be appointed as Chairman for a one-year term of office. I would ask Markus Baumann please, to guide us through the vote. We will carry out the elections to the Board of Directors in one round of voting using your televoter. You will see all of the names of the candidates or the members of the board standing for reelection on your screen. The 10 candidates will be shown across four pages on your televoter.
You can use the arrow at the bottom of the screen, there are arrows to move on to the next page or to go back to the last page. Those arrows will continue to flash until you have cast a vote on each name on the page and moved on to the next page. Since we have 10 individual votes to cast, we will give you 40 seconds in total, the voting time begins now.
Time is up, the results will be shown on-screen within just a few moments. As you can see from the results on-screen, you have approved the board's proposals at vast majorities. The annual general meeting thus has reelected all candidates up for reelection, including myself as the chairman of the board. Congratulations to all members on reelection. I'm happy that you will continue to support the board of directors. The members of the board reelected declared to me in the run-up to this meeting that they will accept reelection. Moving on to the votes on item 61 and 62. The board of directors proposes to elect William Dudley and Jeanette Wong for a one-year term each as members of the Board of Directors. As soon as voting time is on, the two names of the candidates up for election will be shown on your screen.
You will have 12 seconds time is running from now. Cast your vote, please. Time is up. Bear with me until the results are displayed on the screen behind me. As you can see from the results on the screen, 98.7% of the votes have been in favor of election of William Dudley and 99% in favor of election of Jeanette Wong. The Annual General Meeting thus has elected William Dudley and Jeanette Wong as members of the Board of Directors. Congratulations to the two members on election, I am pleased to see them support us.
I congratulate you on your election. I'm looking forward to our future cooperation, I cordially welcome you to the Board of UBS.
The newly elected members of the Board have explained to me before the Annual General Meeting that they're going to accept election, should they be elected. Moving on to the votes on items 7.1 to 7.4, the Board of Directors proposes to elect Julie Richardson and Dieter Wemmer, re-elect them as members of the Compensation Committee for one year, elect Reto Francioni and Fred Hu as new members of the Compensation Committee for one year. As soon as the voting time is on, the full names of the candidates to be elected or re-elected will be displayed on two pages with the arrow at the bottom right. You can go to the next page, the arrow on the bottom left will take you back one page. The time will be 15 seconds, time is running from now. Please cast your votes. Time is up.
Bear with me. The results will be shown in just a few moments. As you can see from the results on the screen, all the candidates have been elected or re-elected at vast majorities. The Annual General Meeting has re-elected Julie Richardson and Dieter Wemmer as members of the Compensation Committee, elected Reto Francioni and Fred Hu. I congratulate the four members on their election, I'm pleased that you're going to support the Compensation Committee in future. The elected members of the Compensation Committee have announced to me in the run-up to the AGM that they're going to accept election. Moving on to Item 8, approval of compensation for the members of the Board of Directors and the Group Executive Board.
Pursuant to Article 43, Paragraph 1, Letters A to C of the Articles of Association of UBS Group AG, the annual general meeting has to approve both the maximum aggregate amount of compensation for the members of the Board of Directors for the period from today's AGM to the next mandatory AGM and the aggregate total compensation, a variable compensation for the members of the Board, Executive Board for the current year, and the maximum total amount of fixed compensation for the members of the Executive Board for the following financial year. In view of the next three votes on compensation, may I refer you to the 2018 compensation report of UBS Group AG and the additional brochures on pay enclosed with the invitation to the meeting today. In both reports, the total amounts of compensation are explained in detail.
First of all, we are going to deal with all the three votes on pay and discuss them, and only then we'll vote on them individually in one go. Following these introductory remarks, let me proceed to Item 8.1, approval of the compensation for the members of the Board of Directors, the aggregate amount of variable compensation for the members of the Group Executive Board for the financial year 2018. The proposed total amount of compensation for the Board of Directors of CHF 14.5 million includes compensation for myself as the Chairman and the fees of all the independent members that you have just elected. The fees of the independent members are the same as in previous years, and indeed, since UBS AG was founded in 1998, these have almost remained unchanged. Even my compensation has been the same for a number of years.
Moving on to Item 8.2, approval of the aggregate amount of variable compensation for the members of the Group Executive Board for the 2018 financial year. The Board of Directors proposes an aggregate amount of variable compensation for the members of the Executive Board in the amount of CHF 73.3 million for the 2018 financial year. In defining the variable compensation, we resort to performance of the members of the Executive Board and a number of objectives based on our pillars, principles, and behaviors. The financial variables relate to the corporate results and the roles of the members of the Executive Committee and the performance in the corporate division, the region, or the function, and the performance with regard to our pillars and principles or additional factors in assessing the overall quality and sustainability of financial results.
In addition, aggregate compensation for each role is compared to a peer group. A description of performance assessment of the members of the Executive Board and assessment of the performance of Group CEO can be found in our 2018 compensation report in detail. The aggregate amount of performance-dependent allocations to the members of the Executive Board correspond to about 1.2% of the adjusted pre-tax income, which is clearly below the cap defined by the Board of Directors of 2.5%. This proposal corresponds to a decrease of around 1% compared to the previous year and reflects performance of the Executive Board with a view to sustainable performance, preservation of our strong capital position, and the increased payback to our shareholders, this in a demanding market setting.
Moving on to item 8.3, approval of the maximum aggregate amount of fixed compensation for the members of the Group Executive Board for the 2020 financial year. The Board of Directors proposes a maximum aggregate amount of fixed compensation for the members of the Group Executive Board in the amount of CHF 33 million for the 2020 financial year. The proposed maximum aggregate amount of fixed compensation for the members of the Executive Board in the amount of CHF 33 million includes, in particular, the base salaries with currently CHF 2.5 million being paid to the Group CEO and CHF 1.5 million to each other member of the Executive Board. These base salaries have not been increased since 2011. Furthermore, the maximum aggregate amount of fixed compensation includes role-based allowances, estimated standard contributions to pension schemes and fringe benefits, as well as a reserve.
Compared to the previous year, the maximum aggregate amount is CHF 1.5 million higher. This reflects the extension of the Executive Board due to reappointments in 2018 and corresponds to the base salary of a single member of the Executive Board. The proposed maximum aggregate amount is considered by the Board of Directors to be sufficient to cope with possible reappointments and further role-based allowances. I herewith open the floor for a debate on approval of compensation for the members of the Board of Directors and the Executive Board. No one has signed up to speak. I propose that we close the debate and move on to voting on items 8.1, 8.2, and 8.3. I will repeat.
The Board of Directors proposes that the maximum aggregate amount of compensation of CHF 14,500,000 for the members of the Board of Directors for the period from the 2019 AGM to the 2020 AGM be approved. This is item 8.1. Item 8.2. The motion is the Board of Directors proposes that the aggregate amount of variable compensation of CHF 73,300,000 to the members of the Group Executive Board for the 2018 financial year be approved. Thirdly, 8.3, the Board of Directors proposes that the maximum aggregate amount of fixed compensation of CHF 33 million for the members of the Group Executive Board for the 2020 financial year be approved. We are going to vote on these three items in one single go.
As soon as the voting time is on, you will be shown the three proposals on one single page of your televoting system, and you will have 15 seconds time to cast your votes. The vote is on now. Please cast your vote. Time is up. Bear with me until the results are displayed on the screen behind me. As you can see from the results on the screen, you have approved the Board's proposals by vast majorities. The AGM thus has approved the Board's proposals. This brings us on to item 9, re-election of the independent proxy, ADB Altorfer Duss & Beilstein AG of Zurich for a one-year term of office ending at the end of the Annual General Meeting in 2020. The floor is open for a debate on this item. No one is requesting the floor, let's proceed straight to the vote.
The board of directors proposes re-election of ADB Altorfer Duss & Beilstein AG of Zurich as independent proxy for a one-year term of office expiring after completion of the 2020 AGM. The ballot is open now. Voting time is running from this moment.
The option
Time is up. Bear with me. As you can see from the results on the screen, 99.7% of you have voted in favor and 0.2% against re-election of the independent proxy. The annual general meeting thus has approved the board's proposal. Congratulations to Altorfer Duss & Beilstein on re-election. This brings us on to the final item on the agenda today, which is item 10, re-election of Ernst & Young, the auditors, Ernst & Young of Basel, as the auditors for the consolidated and standalone financial statements of UBS Group AG. Ernst & Young are a professional and efficient partner meeting the high requirements of a global financial industry business. Long-standing partnership has the decisive benefit that Ernst & Young is familiar with the structures, products, and services we provide and can effectively execute its controlling and auditing function.
Ernst & Young has confirmed to the audit committee of the board that they are independent as required to execute the mandate, and that independence is not impaired by additional services provided to the UBS Group. Such additional mandates require prior approval by the audit committee. Ernst & Young have also confirmed that UBS Group AG and its subsidiaries between January 1st and the 31st of December 2018 has not received any services from Ernst & Young that would not be prohibited according to the American SEC for independent auditors. No one has requested the floor on this item. Let's proceed to the vote. The board of directors proposes that Ernst & Young of Basel be re-elected for a one-year term of office as auditors for the consolidated and standalone financial statements of UBS Group AG. Voting is open. The voting time is running from now.
The option
Time has expired. As you can see from the results on screen, the share of yes votes is 94.8% versus 5% of no votes, and this is about re-election of the auditors of Ernst & Young. Basel, the AGM, thus has approved the board's proposal. Congratulations to Ernst & Young Limited on re-election. Dear shareholders, I would like to thank you for your interest that you have expressed by visiting the AGM today. I do take note that you have not fully supported all the board's proposals. You have not been in agreement with all of them. I can assure you that we are taking these concerns seriously.
What has been rejected today or approved only by the skin of our teeth, we are going to talk about on our meetings and the detailed results and the presentations we gave today will be put on our website following the AGM and in the course of next week, you will also find an abridged version of the minutes of the AGM today on our website. The next annual general meeting of UBS Group AG is going to take place on the 29th of April 2020, again here at St. Jakobshalle in Basel. Somebody dropped on the stairs and is being taken care of. I would like to invite you to the shareholders reception. The wines come from the region of Klettgau. I hope you're going to have great conversations over drinks and a safe trip home.
Can I ask you to hand back your televoting devices when you leave the hall? Please, ladies and gentlemen, be careful on the stairs. The light should come up. Please, ladies and gentlemen, I herewith close the annual general meeting of UBS for 2018.