CORRECTED - FACTBOX-UBS reins in compensation for top executives

Mon Nov 17, 2008 11:16am EST

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(Corrects paragraph 11 to show that shareholder vote on new pay system will take place next year)

Nov 17 (Reuters) - Swiss bank UBS (UBSN.VX) axed bonuses for top executives on Monday and said it would introduce a more transparent pay system in the most far-reaching changes on pay at a top European lender during the credit crisis. [ID:nLH525838]

Below are the main points of the new compensation model

* UBS to axe 2008 variable compensation for Chairman Peter Kurer, CEO Marcel Rohner and the other board members.

* UBS chairman will no longer get any variable compensation, only a fixed-base salary in cash and a number of shares restricted from sale for four years.

* The bank will also reduce 2008 bonuses for all managers and for specific employees. The size, composition and allocation of the variable compensation for 2008 will be discussed with the Swiss Federal Banking Commission after year-end results.

* As of 2009, UBS will hold a large portion of managers' variable compensation, cash and equity, in a reserve and pay it out only if the results of UBS warrant it.

* Board members will receive a fixed salary and variable compensation in cash and equity. A large portion of the variable component will be held back and fully paid out only if UBS achieves good business results in future years.

* UBS is introducing a bonus/malus system for variable compensation, with payouts subtracted in the case of poor results.

* A maximum of one-third of the annual variable cash compensation will be paid out. The larger part of it will be held in an escrow account and kept for future performance. If UBS achieves a loss, the cash balance will be reduced.

* Shares awarded as variable compensation will only vest after three years. Executives are obliged to hold 75 percent of their vested shares (after paying taxes) for several more years. If UBS's performance in the 3-year measurement period does not meet the set criteria, the number of awarded shares is reduced.

* Shareholders will hold an advisory vote on the new scheme at the bank's next annual general meeting.

* Independent board members will continue to receive only fixed compensation. Fees are paid 50 percent in cash and 50 percent in restricted UBS shares. Members can elect to have 100 percent of their compensation paid in UBS restricted shares.

* A potential claw-back of paid bonuses for the former board members, which include former chairman Marcel Ospel, is being assessed on legal grounds. (Writing by Lisa Jucca; Editing by Hans Peters)

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