NEW YORK, Jan 29 (Reuters) - UBS AG UBSN.VX, which agreed to change its compensation practices when it received a Swiss government bailout last fall, on Thursday confirmed it is slashing 2008 investment bank bonuses by 80 percent.
People familiar with the situation, meanwhile, told Reuters that bonuses for the investment bank’s highest ranking executives would be paid out entirely in deferred shares and zero cash.
The deferred payments will be distributed in three annual installments, each of which may be canceled in any year the bank reports a loss.
UBS UBS.N declined to comment, except to confirm a Swiss government spokesman who earlier on Thursday said that "2008 variable compensation will be reduced by over 80 percent. A part of those payments is derived from working contracts; others include further variable remuneration components. The definitive numbers are still being worked out."
Based on the roughly 10 billion Swiss francs in cash and stock paid out last year, that would reduce the UBS bonus pool to less than 2 billion francs. Out of that pool, roughly 1.3 billion francs are to be paid out under the terms of preexisting employment contracts, the sources told Reuters. (Reporting by Joseph A. Giannone; Editing by Brian Moss)
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