UBS defends billionaires as the best corporate leaders

Billionaire Jeff Bezos owns only 11.6 per cent of Amazon. Photo / Getty Images

UBS has rushed to the defence of billionaires, arguing they outperform as corporate leaders and receive unfair criticism in the press.

The Swiss bank produced a report on Friday showing that listed companies run by billionaires do better on the stock market than peers with less wealthy chief executives and deliver wide-ranging economic benefit.

"I am not saying billionaires should be heroes," said Josef Stadler, head of the ultra-high net worth unit at UBS, the world's largest private wealth manager. "But at least they should be recognised."

Shares in some 600 publicly quoted companies controlled by billionaires rose 17.8 per cent between 2003 and 2018 compared with an overall 9.1 per cent gain in global stock markets, as measured by the MSCI All-Country World index (ACWI), according to the research by UBS and PwC, the accountancy firm.

The report coincides with a growing debate in the US and Europe on wealth concentration and inequality.

Speaking to the Financial Times, Mr Stadler said there was "bias in the media" in reporting on billionaires. "In the talk of inequality, the debate that they are too greedy, that they make too much money on the back of poor people."

He said: "The data tells me that the debate is one-sided and it's a pity. There is a natural tendency today to be critical when it comes to wealth accumulation. There is sometimes a fear that there is a new aristocracy coming."

Mr Stadler also acknowledged criticism of multinationals over cross-border tax minimisation schemes. "This certainly needs to be closely watched," he said. UBS has been hit with billions of dollars in fines for helping rich clients evade taxes, including a €4.5bn penalty in France this year.

The stock market performance is boosted by the surge in valuations of billionaire-led technology companies, such as Facebook and Alphabet. The report shows that the billionaires' stock market success is clearest in the US, followed by China. Europe "has lagged behind slightly", yet billionaire companies still perform "significantly" better than the rest of the pack.

The report's methodology considers control to be 20 per cent of a company's equity or 30 per cent of a company's voting rights. That would exclude famous billionaire founders such as Jeff Bezos, who owns only 11.6 per cent of Amazon, but the report allows for exceptions where "the billionaire evidently steers the company".

Coming at a time when capitalism faces heavy criticism in the US and Europe, the report presents a stout defence of the world's top wealth creators in applying "new technologies and business models to change entire industries".

The authors argue that, while billionaires enrich themselves, they benefit the rest of society by generating jobs, creating wealth for others, including many employees, and paying tax.

Written by: Stefan Wagstyl

© Financial Times 2019