UBS AG announced that it will adopt a new compensation model for its top executives and directors in 2009, designed to better align incentives with long-term shareholder value.

The firm said that the new compensation model will be focused on the long-term and more closely aligned with the value creation of the firm. Additionally, it said that its chairman and the members of the executive board will not receive any variable compensation for 2008. The size, composition and allocation of 2008 variable compensation for other employees will be determined by the board once 2008 results are known and after consultation with the Swiss Federal Banking Commission.

The new compensation system was discussed with the SFBC in accordance with the requirements listed in the action plan of the Swiss authorities and the standards for the financial sector which are currently being established, it said. These discussions will be continued and the salary system will be regularly assessed.

The fundamental changes to the compensation system include:

the chairman will no longer be bound to the same incentive system as the group executive board and will no longer receive variable compensation;

variable cash compensation for the executive board will be based on a bonus/malus system (a malus being a situation where results are poor and leads to a negative award); and

this system will also apply to variable equity compensation.

At the same time, the New York state attorney general, Andrew Cuomo, praised Goldman Sachs for deciding to forgo bonuses his year. “Goldman Sachs has taken an important step in the right direction,” he said. “American taxpayers have seen their investment portfolios plummet while simultaneously having to fund the Wall Street bailout with their tax dollars. This gesture by Goldman Sachs is appropriate and prudent and hopefully will help bring Wall Street to its senses. We strongly encourage other banks to folllow Goldman Sachs’ step.”