UBS has reduced its performance award pool to the lowest levels since the beginning of the financial crisis.
According to the Swiss bank’s Annual report 2012, this was reduced to SFR2.5 billion (£1.75 billion) in 2012, down 7% from 2011, and a 43% decrease compared with 2010.
Group chief executove officer Sergio Ermotti was granted a performance award of SFR6.1 million (£12.95 million).
UBS implemented a number of changes to its compensation framework for 2012 to better align employee and shareholder interests. The changes are designed to focus employees on medium and longer-term performance, give staff the opportunity to benefit from the organisation’s longer-term success, and simplify UBS’s compensation framework to make it more transparent.
The changes include:
- longer deferral periods
- multi-year performance conditions on equity-based deferred compensation
- a new loss-absorbing high-trigger deferred capital instrument, under which employees would forfeit deferred compensation balances if a 7% Basel III CET1 ratio level is breached or if a non-viability event occurs.
- a reduction in the maximum initial cash payment that an employee may receive as part of a performance award.
In a letter to shareholders, Ann Godbehere, chair of the human resources and compensation committee of the board of directors, said: “Our compensation philosophy is to provide our employees with compensation that recognises their individual contributions and that clearly links their pay not just to the delivery of business targets but also to demonstrating the right behaviours.”