Item 6: Creation of Conditional Capital
Approval of Article 4a para. 2 of the Articles of Association
The Board of Directors proposes the creation of conditional capital in a maximum amount of CHF 15,000,000 by means of the following addition to the Articles of Association.
The current Article 4a of the Articles of Association will be renamed Article 4a para. 1 of the Articles of Association.
Article 4a para. 2 (new)
Employee participation plan UBS AG
The share capital may be increased by a maximum of CHF 15,000,000 through the issuance of a maximum of 150,000,000 fully paid registered shares with a par value of CHF 0.10 each upon exercise of employee options issued to employees and members of the management and of the Board of Directors of the Corporation and its subsidiaries. The pre-emptive rights and the advance subscription rights of the shareholders shall be excluded. The issuance of these options to employees and members of the management and of the Boards of Directors of the Corporation and its subsidiaries will take place in accordance with the plan rules issued by the Board of Directors and its Compensation Committee. The acquisition of shares through the exercise of option rights as well as every subsequent transfer of these shares shall be subject to the registration requirements set forth in Article 5 of the Articles of Association.
For the past two years, UBS AG has issued approximately 25,000,000 options per year to employees and members of the Board of Directors in order to enhance their identification with the Corporation. UBS AG will continue the targeted use of options as a long-term incentive and as a means to motivate employees to invest further in UBS shares. As a rule, the allocation of options is the responsibility of the Compensation Committee of the Board of Directors. The Compensation Committee sets the strike price at an amount equal to or higher (namely for the top management) than the share price of the registered shares on the grant date of the options. As of 1 January 2005, the costs of the allocated options have been registered as personnel expenditures in UBS's income statement. Until now, these options were serviced with treasury shares. The creation of conditional capital increases UBS's flexibility to manage its capital. The conditional capital will be used for future issuances of options.
The new Article 4a para. 2 of the Articles of Association shall be recorded in the Commercial Register together with the amendments to the Articles of Association approved under Agenda Item 5.5. In the event that the shareholders reject individual proposals of the Board of Directors as set forth in Agenda Items 5.3 or 5.4, Article 4a para. 2 of the Articles of Association will be amended accordingly.