As a part of the move, UBS is considering a range of options including putting a lid on executives’ bonuses either in relation to fixed salary or the bank’s net profit, increasing the time for deferred pay to five years and aligning its absolute remuneration level with the average of a peer group.
Financial Times quoted persons familiar with the matter saying that the ideas for wide-ranging reforms will be debated at board level in the next few months, while the final plan will be presented to key investors several months ahead of the annual meeting that is scheduled to be held in May 2012.
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UBS could copy the scheme of capping bonuses that is followed by UK-based Barclays and HSBC banks, where executive directors’ annual variable pay is limited to 250% and 300% of base salary respectively, the Financial Times report added.
Otherwise, UBS could also emulate Credit Suisse’s system of restricting the bonus pool of top managers to a specified amount of net profit. In 2011, Credit Suisse introduced a target to keep executive board’s variable pay below 2.5% of net profit.
It is also reported that the new pay system would be designed to make UBS’s performance criteria and benchmarks more transparent to investors.
At the company’s last annual meeting held in May 2012, only 60% of the capital represented approved its pay system. The investors had criticized lack of disclosure and too high a proportion of variable pay.
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