UBS is to adopt a new compensation strategy for its board of directors and group executive board after canceling this year's bonuses for its top executives.
From 2009, variable cash and equity compensation for the group executive board will be based on a bonus/malus (which is Latin meaning good and bad respectively) system, so this group will only be rewarded for good performance. The new structure, which has been approved by the Swiss Federal Banking Commission (SFBC), is intended to align the bank's reward strategies with its long-term aims.
In addition, the chairman of the board of directors will no longer be bound to the same incentive system as the group executive board and will no longer receive variable compensation components.
The move came as the Swiss bank announced that the chairman of the board and the group executive board will not receive any variable compensation for 2008. The size, composition and allocation of this year's variable compensation for other employees will be determined by the board of directors once the group's 2008 results are known, and after consultation with the SFBC.