UBS to pay £207m in long-term bonus awards after cutting bonus pool in 2011

Swiss bank UBS is to pay £207 million (SFr300 million) in long-term bonus awards to retain senior employees in its investment banking division after cutting its bonus pool by 40% in 2011.

The ‘special plan’ awards, which were disclosed in UBS’ Fourth quarter 2011 results, will be share-based and must be held for three years by select employees before they are able to cash them in. Because they are intended as a retention tool, the awards will have strict forfeiture conditions attached.

The results also showed that UBS cut its investment banking division’s bonus pool by 40% in 2011, which reduced costs by SFr2.1 billion.

Salaries and variable compensation decreased by SFr317 million, mainly reflecting reduced expenses for variable compensation.

UBS also made changes to its pension scheme in 2011, including using updated actuarial assumptions, such as higher future life expectancy.

With effect from 2013, the conversion rate used for calculation of the pension scheme at retirement will be reduced and the regular retirement age will be raised by two years.

UBS’ defined benefit (DB) obligation for its pension scheme increased by SFr1.5 billion in the fourth quarter of 2011, mainly as a result of the updated actuarial assumptions.†

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