Phil Gramm's UBS has been one of the hardest hit banks in this crisis, writing down tens of billions. Back home in Switzerland, this has been an enormous blow both financially as well as psychologically because the bank had become so large globally and a real source of pride for the Swiss. The pay model that they are moving to is one that has often been mentioned as a possible model for Wall Street. Instead of paying out massive sums right away regardless of whether they're pulled from the books or not, this will spread out payment over a three year period. That's a good start though I still think five years, if not longer, makes more sense. After this disaster we really need to do a lot more to make bad business not pay, so this move by UBS is a welcome change.
Starting from 2009 UBS top managers' bonuses will be blocked for at least three years instead of being paid immediately.
Managers will receive variable compensation if UBS results warrant.
"UBS takes the shortfalls of its current incentive system seriously and is revising its variable compensation model for the 2009 fiscal year," the bank said in a statement.
"UBS is fully committed to taking its responsibilities seriously and correcting previous errors" Bankers' pay at Switzerland's top banks UBS and Credit Suisse has been the subject of hot debate in the country and almost a thousand people took to the streets of Zurich on Saturday to protest against what they see as bankers' inflated salaries.
Some major European players like Deutsche Bank have already said they will cut bonuses this year.
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