Normalizing performance award levels.
UBS increased its bonus pool 28% for 2013 as it returned to profit after a loss the previous year on reorganization charges and a fine for allegedly trying to rig global interest rates.
Bloomberg News reports that the bonus pool, including pay deferred into future years, grew to $3.5bn from $2.7bn, the bank said today. UBS will again award part of pay in deferred awards that can be wiped out if the bank’s capital falls below a predefined level.
UBS and Credit Suisse are both using contingent capital bonds as part of their compensation to boost capital ratios, align the interests of employees and shareholders and give incentives to limit risk-taking. UBS is paying about $554m in bonds that will be written off if the bank’s common-equity ratio falls below 7% or the company needs a bailout. For the executive board members, that trigger was raised to 10%.
'In 2013 we finished a transformational year ahead of the majority of our strategic and financial targets', UBS said in a statement. 'We normalized performance award levels in areas impacted negatively last year and reduced gaps to market pay in light of our absolute and relative achievements'.
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