Bonus Watch ’13: UBS

The Swiss bank will reportedly announce today that it’s going to be doing things a little differently around here re: compensation. One, deferrals will start at $250,000 and two, rather than being paid in UBS stock, the non-cash portion of 6,500 senior employees’ bonuses will come in the form of subordinated debt that can and will be wiped out in the event the amount of capital on hand falls below the level required by EU regulators, putting the onus on everyone to make sure no one pulls an Adoboli (and avoids multi-billion dollar fuck-ups in general). Half-Adobolis only moving forward, please.

The new bonus structure for 6,500 of UBS’s highest earners will make Switzerland’s largest lender by assets the first to follow recommendations by an EU commission led by Finnish central banker Erkki Liikanen, paving the way for others in the industry to follow its lead. The commission last year called for bonuses to be partly based on “bail-inable” debt that can be converted to equity or wiped out in the case of trouble. Debt instruments have been used for bonuses by several banks including Royal Bank of Scotland and Credit Suisse in the past few years but were mostly linked to specific and troubled legacy assets. By contrast, UBS’s debt bonus will be written down to zero should the bank’s regulatory capital fall below 7 per cent or in the case of a “non-viability” loss. It will pay a market-based interest rate and will fully vest after five years, people close to the situation said. Analysts said UBS might become a trailblazer for other banks under pressure from investors and regulators to more closely align pay with all stakeholders, including creditors. Such debt instruments increase a bank’s regulatory capital while squaring the circle to align seemingly conflicting demands of investors, regulators and employees.

UBS Leads Way With Bonuses Shake-Up [FT]

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25 Responses to “Bonus Watch ’13: UBS”

  1. UBS Quant via S&P says:

    Great, just when I thought things couldn't get any worse.

  2. Guest says:

    As if working for UBS wasn't already part of a running joke.

  3. Semantics 101 says:

    "Non-viability": yep, that's what the company is right about now.

  4. Guest says:

    I'm in the market for UBS subordinated debt to balance my portfolio. Paying top dollar. Call me.

  5. be relevant says:

    Can you please post more useful information, ie, actual bonus figures?

  6. Sir Mix a Lot says:

    Im good with the UBS bonus figure.

  7. Gnome says:

    Message was as follows:
    – bonus pool sucks and will suck going forward
    – structure sucks. May get worse.
    – likely only 50% will get any meaningful bonus anyway; feel free to start pack your belongings
    – current bonus pool may be impacted by results from years past and there is no statute of limitations applied to screwing current employees
    – clawbacks are in effect. Beware, they are sharp and dangerous
    – company still thinks they have a viable ibank. Could be wrong, but don't really care either way

  8. Andrea Orcel says:

    – if you voluntarily own shares in this firm, you're retarded
    – if you rely on this firm to manage your money, you're retarded, their track record speaks for itself
    – if you work there and think they are going to pay you fairly this year or ever in any group, front to back, you're retarded
    – if you are a manager or board member and think any of your remaining talented staff is going to stay with you for the good of the company, you're retarded
    – if you are a manager or board member and think you'll have a job or company to manage in the near future, you're retarded, it's over, the place is unable to get out of its own way

    godspeed retards, keep fucking that chicken!

  9. Longjohnson says:

    The board should've recommended to ax all
    Md's. this place operates more like a govt bureaucracy.

  10. UBS HR says:

    Hope M!ke Stewart's guarantee is money good. He's aces.

  11. Ex UBS SA says:

    this company stole my soul and my adolescent ignorance

  12. Rodskog says:

    I'm clueless