Introduction and principles

Corporate governance - the way that the leadership and management of a firm are organized and how they operate in practice - ultimately aims to lead UBS towards sustainable growth, protect the interests of its shareholders and create value for both them and all stakeholders. Good corporate governance seeks to balance entrepreneurship, control and transparency, while supporting the firm's success by ensuring efficient decision-making processes.

UBS fully complies with the SWX Swiss Exchange's (SWX) regulatory requirement "Directive on Information Relating to Corporate Governance" (revised directive as of 1 January 2007), as well as the amended Swiss Code of Obligations (CO) with the newly introduced articles Art. 663bbis and Art. 663c paragraph three regarding transparency in compensation paid to members of the Board of Directors (BoD) and senior management. In addition, UBS fully complies with the standards established in the "Swiss Code of Best Practice for Corporate Governance", including the recently adopted appendix on executive compensation.

UBS also meets the New York Stock Exchange (NYSE) corporate governance standards applicable to listed foreign companies and complies with the overwhelming majority of NYSE standards for US domestic issuers. The few exceptions are mainly due to different legal systems in Switzerland and the US and relate to the role, responsibilities and authorities of the BoD and the annual general meeting (AGM) (see pages 47-48 for more information). UBS complies with the applicable requirements of the US Sarbanes-Oxley Act of 2002, including the certification of UBS's annual report on Form 20-F by the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO).

This Corporate Governance and Compensation Report 2007 contains the following regulatory information required by:

– SWX "Directive on Information Relating to Corporate Governance" (revised directive as of 1 January 2007) with regard to Group structure and shareholders, capital structure, Board of Directors, Group Executive Board, compensation, shareholdings and loans (revised), shareholders' participation rights, change of control and defense measures, auditors and information policy;

– Art. 663b^bis and Art. 663c paragraph three of the CO "Supplementary disclosures for companies whose shares are listed on a stock exchange: Compensations and Participations", with regard to share and option ownership and loans; and

– NYSE "Corporate Governance Listing Standards" with regard to foreign listed companies, independence of directors, board committees and differences from NYSE standards.

In addition, this section summarizes the regulatory and supervisory environment of UBS in its principal locations and provides a list of all members of the Group Managing Board (GMB) and the Vice Chairmen of the business groups who, together with the Group Executive Board (GEB), form the senior leadership of the firm.

The section on executive compensation has been re-written this year to reflect and fully comply with new reporting requirements under the CO.