Compensation Committee

Governance, authorities and responsibilities

UBS has long been committed to the highest standards of corporate governance. The approval of senior executive compensation follows a rigorous process designed to ensure that no one participates in any decision affecting his or her own compensation.

The Compensation Committee is responsible for reviewing the UBS Total Compensation and Benefits Principles for submission to the BoD.

Additionally – for executive members of the BoD and members of the Group Executive Board (GEB) (senior executives) – the Compensation Committee has responsibilities in five key areas:

reviewing and approving the design of the total compensation framework, including compensation programs and plans;
determining the relationship between pay and performance;
approving base salaries and annual incentive awards for senior executives;
reviewing and approving individual employment agreements; and
reviewing and approving the terms and conditions for GEB members relinquishing their positions.

Authority for compensation-related decisions is governed by the “Appendix to the Organization Regulations – Authorities” and the “Charter for the Compensation Committee”. The structure is as follows:

Recipients	Compensation recommendations developed by	Approved by	Communicated by

Chairman of the Board of Directors (BoD)	Chairman of the Compensation Committee	Compensation Committee	Chairman of the Compensation Committee
Executive BoD members	Chairman of the BoD	Compensation Committee	Chairman of the BoD
Group Chief Executive Officer (CEO)	Chairman of the BoD	Compensation Committee	Chairman of the BoD
Members of the Group Executive Board (GEB)	Chairman of the BoD and Group CEO	Compensation Committee	Group CEO
Remuneration system and fees non-executive BoD members¹	Executive members of the BoD	Executive members of the BoD	Chairman of the BoD

Activities

During 2007, the Compensation Committee carried out:

a review of best practice in compensation governance, design, pay-mix and disclosure, which combined publiclyavailable information on key competitors with market data provided by UBS’s principal executive compensation consultant (Towers Perrin MGMC);
a review of pay and performance to ensure that senior executive compensation levels were appropriate compared with counterparts of competitors; and
a review of the compensation plan rules for senior executives to ensure they clearly reflect shareholders’ interests and provide appropriate incentives for long-term value creation.

The Compensation Committee did not appoint any external compensation consultants during 2007. Rather, it relied on detailed background documentation – internal and external compensation surveys and other intelligence – provided by internal HR compensation specialists as well as on data from the Group controlling department and the accounting department. The Chairman of the Compensation Committee also made use of information obtained through participation in various international seminars for compensation professionals.