Item 5

Increase of conditional capital and approval of amended Article 4a para. 1 of the Articles of Association

A. Motion
The Board of Directors proposes to increase the size of the conditional capital under Article 4a para. 1 of the Articles of Association from CHF 14,863,932.60 to CHF 30,000,000 and to amend the current wording of Article 4a para. 1 of the Articles of Association to permit the delivery of shares out of the conditional capital to satisfy awards granted under employee share plans as follows:

B. Explanation
Share awards are being granted under UBS option and share based compensation plans as a means of aligning the interests of employees and management with the interests of shareholders.

To align reward with sustainable performance, UBS pays a significant part of variable compensation in the form of UBS shares that are deferred over several years, in line with regulatory requirements. Until now, those share awards were satisfied with treasury shares, thereby leading to a reduction in the capital ratio.

Under its current wording, the conditional capital pursuant to Article 4a para. 1 of the Articles of Association may only be used to satisfy entitlements existing upon exercise of options. Options have, however, not been issued since 2009. As UBS will continue to use share awards as part of variable compensation, the permitted use of the conditional capital shall be extended to include entitlements under share plans, in addition to option plans. The conditional capital shall be used to satisfy entitlements under existing and future share and option plans.

In order to allow for flexibility to manage UBS’s capital and to support its efforts to meet the capital build-up target under the new regulatory framework, it is also proposed to approve a limited increase in the number of shares available under the conditional capital to satisfy share awards. As a rule, the use of conditional capital to satisfy awards granted under option and share plans is the responsibility of the Board of Directors.