Compliance with New York Stock Exchange listing standards on corporate governance

As a Swiss company listed on the New York Stock Exchange (NYSE), UBS complies with the NYSE corporate governance standards for foreign private issuers. In addition, UBS has voluntarily adopted the majority of NYSE governance rules for US companies.

Independence of directors

Based on the listing standards of the NYSE, UBS's BoD has established specific criteria for defining the independence of its external members. Each external director has to personally confirm his or her compliance with the criteria, which are published on the firm's website under www.ubs.com/governance.

All current external members have been confirmed by the BoD as having no material relationship with UBS, either directly or as a partner, controlling shareholder or executive officer of a company that has a relationship with UBS. These members are: Ernesto Bertarelli, Sally Bott, Rainer-Marc Frey, Bruno Gehrig, Gabrielle Kaufmann-Kohler, Sergio Marchionne, Helmut Panke, William G. Parrett, David Sidwell, Peter R. Voser and Joerg Wolle. Each of them has also met all other BoD and NYSE requirements with respect to independence, with the exception of Ernesto Bertarelli. He does not satisfy one of the independence requirements because UBS holds the basic sponsorship rights to Team Alinghi and Ernesto Bertarelli is the owner of Team Alinghi SA. Otherwise he fully satisfies the NYSE independence requirements. The BoD considers that UBS's compensation for these basic sponsorship rights to Team Alinghi does not impair Ernesto Bertarelli's independence in any way.

The NYSE has more stringent independence requirements for members of audit committees. All three members of UBS's audit committee are external BoD members who, in addition to satisfying the above criteria, do not: receive, directly or indirectly, any consulting, advisory or other compensatory fees from UBS other than in their capacity as directors; hold, directly or indirectly, UBS shares in excess of 5% of the outstanding capital; or serve on the audit committees of more than two other public companies. These members are Peter R. Voser, William G. Parrett and Bruno Gehrig and all three have been determined by the BoD as financially literate and "financial experts" according to the definitions established by the US Sarbanes-Oxley Act of 2002. The NYSE guidelines allow for an exemption for audit committee members to sit on more than three audit committees, provided that all members of the BoD determine that the candidate has the time and the availability to fulfill his or her obligations. Considering the credentials of William G. Parrett, and the fact that he has retired from his executive functions, the BoD granted this exemption.

Board of Directors and its committees

UBS operates under a strict dual board structure mandated by Swiss banking law. No member of the Group Executive Board (GEB) may also be a member of the BoD and vice versa. This structure ensures the institutional independence of the entire BoD from the day-to-day management. UBS has established committees for the following BoD mandates: audit; human resources and compensation; governance and nominating; risk; strategy and corporate responsibility. Refer to the "Board of Directors" section of this report for further information on these committees - including their mandates, responsibilities and authorities - as well as their activities during 2008. In addition, the BoD elects at least one vice chairman who must be independent and who acts as the senior independent director. Sergio Marchionne has assumed this role. The BoD may elect another vice chairman who need not be independent, but has not done so at this time. More ­details about the vice chairman function can be found in the "Organization Regulations of UBS AG" and its annexes, which are published on www.ubs.com/governance.

The BoD has adopted organization regulations that constitute UBS's corporate governance guidelines, which include all matters required by the NYSE rules. The BoD has also adopted a "Code of Business Conduct and Ethics" with an addendum for principal executive, financial and accounting officers or controllers, as required by the US Sarbanes-Oxley Act. Both the organization regulations and the "Code of Business Conduct and Ethics" are available on the UBS website at www.ubs.com/governance. In addition, the audit committee has established rules for the handling of complaints related to ­accounting and auditing matters in addition to the internal policies on "Whistleblowing Protection for Employees" and on "Compliance with Attorney Standards of Professional ­Conduct".

Differences from corporate governance standards relevant to US listed companies

According to the NYSE listing standards on corporate governance, foreign private issuers have to disclose any significant ways in which their corporate governance practices differ from those to be followed by domestic companies.

Responsibility of the audit committee for appointment, compensation, retention and oversight of the independent auditors

UBS's audit committee has been assigned all the abovementioned responsibilities, except for appointment of the independent auditors, which is required to be voted upon by shareholders as per Swiss company law. The audit committee assesses the performance and qualification of the external auditors and submits its proposal for appointment, re-appointment or removal to the full BoD, which brings this proposal to the shareholders for vote at annual general meetings (AGM).

Discussion of risk assessment and risk management policies by the audit committee

In accordance with UBS's organization regulations, the BoD risk committee has the authority to define the firm's risk principles and risk capacity. The committee is responsible for monitoring UBS's adherence to those risk principles and for monitoring whether business and control units run appropriate systems for the management and control of risks.

Assistance by audit committee of the internal audit function

Both the Chairman and risk committee of the BoD have the responsibility for and authority to supervise the internal audit function.

Responsibility of the human resources and compensation committee for oversight of management and evaluation by the Board of Directors

Performance evaluations of UBS's senior management, comprising the Group Chief Executive Officer and the members of the GEB, are completed by the Chairman of the BoD and the human resources and compensation committee and reported to the full BoD. All BoD committees perform a self-assessment of their activities and report back to the full BoD. The BoD has direct responsibility and authority to evaluate its own performance, without preparation by a BoD committee.

Proxy statement reports of the audit and human resources and compensation committees

Under Swiss company law, all reports addressed to shareholders are provided and signed by the full BoD, which has ultimate responsibility vis-à-vis shareholders. The committees submit their reports to the full BoD.

Shareholders' votes on equity compensation plans

Swiss company law authorizes the BoD to approve compensation plans. Though Swiss law does not allocate such authority to the AGM, it requires that Swiss companies determine capital in their articles of association and therefore each increase of capital is required to be submitted for shareholders' approval. This means that, if equity-based compensation plans result in a need for a capital increase, AGM approval is mandatory. If, however, shares for such plans are purchased in the market, shareholders do not have the authority to vote on their approval.

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