Swiss bank UBS cut bonuses for top executives on Monday and will implement a more transparent pay system. Chairman Peter Kurer, CEO Marcel Rohner, and other executive board members will not receive any bonuses this year, according to Reuters.
In 2009, managers’ bonuses will be blocked for a minimum of three years instead of being paid immediately and executives will receive variable pay, depending on what revenues UBS brings in.
Under the new system, the chairman will be awarded a fixed salary. Kurer’s fixed salary for this year was $1.68 million.
“UBS is fully committed to taking its responsibilities seriously and correcting previous errors,” the bank said to Reuters.
Royal Bank of Scotland, Lloyds TSB, and HBOS will follow suit and not pay bonuses after receiving British government cash and after some Deutsche Bank executives waived their annual bonuses.
Ex-chairman Marcel Ospel spearheaded UBS’ risky strategy in the U.S. subprime market and was forced to quit in April. UBS said that it is conducting a legal review of whether bonuses awarded to former executives could be clawed back.
Shareholder advocacy group Ethos welcomed new rules at UBS but they worry that excessive pay practices will continue.
“UBS does not intend to limit the variable part of the remuneration, by capping for example the bonus in terms of base salary or by setting a maximum amount of shares to be awarded under the long term incentive plan,” Ethos said to Reuters.