ZURICH, Switzerland (AP) -- UBS AG (UBS) said Monday that starting next year it will stop making bonus payments to its chairman and that other top executives will be penalized if the bank performs badly to discourage irresponsible risk-taking.
Switzerland's largest bank has been under pressure to change its compensation model after it was revealed that senior officials were paid bonuses worth millions of francs annually even though their management drove UBS to seek a $60 billion government bailout last month.
UBS chairman Peter Kurer will receive a fixed salary from 2009, the bank said.
Kurer, the most powerful figure at UBS, has already said he will forgo any bonus for 2007 and 2008 until the bank has recovered from a disastrous year that saw it lose 45 billion francs ($40 billion) due to bad investments.The bank will also introduce what it calls a "bonus-malus" system for its other 12 board members that will see their bonus held back for a certain period to discourage risky short-term investments. UBS said it would apply this system to other senior managers in charge of high-risk parts of its business. Goldman Sachs (GS - Get Report), meanwhile, said CEO Lloyd Blankfein and six other top executives at the bank won't be receiving cash or stock bonuses for 2008, according to a spokesman.