In 2012, we implemented far-reaching changes to our compensation framework aligning our plans to our strategy and strengthening the link between compensation and the firm’s medium to longer-term performance. We believe our new compensation structure will help to promote a stronger pay-for-performance culture and will discourage excessive risk-taking.

Following the advisory vote on UBS’s Compensation Report at last year’s Annual General Meeting (AGM), we consulted widely with our shareholders to better understand your views with regard to improving our compensation plans and disclosures. We incorporated the findings from these consultations into our review process and have implemented wide-ranging changes for performance year 2012.. We have strengthened the link between compensation and medium- to longer-term performance, and streamlined our compensation framework by eliminating a number of plans for the Group Executive Board (GEB) and replacing them with two universal plans that apply to all employees with total compensation above CHF/ USD 250,000: the revised Equity Ownership Plan (EOP) and the new Deferred Contingent Capital Plan (DCCP).

Both plans reinforce the firm’s commitment to delivering sustainable performance while allowing our employees the opportunity to benefit from improved longer-term performance. We increased the deferral periods under the EOP and have added multi-year Group and divisional performance conditions that apply to our key leaders and risk takers. We believe these simplified plans will discourage excessive risk-taking and at the same time reward sustainable performance behavior that we believe is in the interests of all the bank’s stakeholders.