2013 compensation

We have built on the important strides we took in 2012 with the adoption of a revised compensation model founded on incentivizing disciplined capital management and with performance awards based on risk-adjusted profitability. In 2013, we have reviewed the firm’s compensation model to ensure it continues to reinforce our employees’ focus on medium- and longer-term performance, and in response to the competitive environment and feedback from our shareholders.

A year ago, we committed to continue adapting our business to better serve clients, reduce risk, deliver more sustainable performance and enhance shareholder returns. In 2013, we made good progress in achieving all these goals and finished the year ahead of the majority of our performance targets. Our business divisions posted strong results for 2013.

Our adjusted Group profit before tax increased 44% year on year to CHF 4.1 billion. Our industry-leading fully applied Basel III common equity tier 1 (CET1) capital ratio increased by 300 bps to 12.8%, surpassing our 2013 target. We achieved this improvement primarily through reductions in fully applied risk-weighted assets (RWA), which were down CHF 33 billion to CHF 225 billion. We also significantly deleveraged our balance sheet, reducing total assets by CHF 250 billion. In 2013, we achieved our CHF 2 billion gross cost reduction target announced in July 2011. As a result of our improved performance, the Board of Directors (BoD) is recommending a 67% increase in the dividend for shareholders for 2013 to CHF 0.25 per share.

Our 2012 performance award pool was significantly affected by the LIBOR matter, negatively impacting awards in the Investment Bank, in some areas of the Corporate Center as well as the Group Executive Board (GEB). Based on our strong performance in 2013, we normalized our performance award levels for those areas most negatively affected last year and reduced gaps to market pay levels, leading to a performance award pool for 2013 of CHF 3.2 billion, which is 28% higher than for 2012. However, reflecting the reduced awards and longer deferrals in recent years which have resulted in decreased charges in 2013 for prior-year deferrals, the cost of performance awards was flat year on year on an accounting basis (IFRS).

Our 2012 performance award pool was significantly affected by the LIBOR matter, negatively impacting awards in the Investment Bank and in some areas of the Corporate Center, as well as the Group Executive Board (GEB). Based on our strong performance

in 2013, we normalized our performance award levels for those areas most negatively affected last year and reduced gaps to market pay levels, leading to a performance award pool for 2013 of CHF 3.2 billion, which is 28% higher than for 2012. However, reflecting the reduced awards and longer deferrals in recent years which have resulted in decreased charges in 2013 for prior-year deferrals, the cost of performance awards was flat year on year on an accounting basis (IFRS).