Components of Compensation

There are two types of compensation, fixed and variable. The mix varies according to the employee’s seniority, business and location.

The pay of most employees is linked to performance, which is measured on several levels:

• Financial performance on a Group and divisional level (compared with strategic business plans, prior periods and peer performance) and on a team and individual level; and
• Success in meeting certain non-financial performance objectives, such as safeguarding our reputation.

There are two types of compensation, fixed and variable. The mix varies according to the employee’s seniority, business and location. Most of the compensation awarded to the majority of employees is fixed.

Fixed compensation

Base salaries for employees reflect seniority, experience, skill sets and individual performance. We seek to pay all employees competitive base salaries in order to attract, motivate and retain highly qualified professionals. Our base salary structure is generally aimed at the median compensation level within the industry in the relevant markets (investment banking, private banking, Swiss corporate and retail banking and asset management). The review period is generally annual and set according to local practice. We also seek to provide competitive pension and other benefits in accordance with local market requirements and practice in each jurisdiction in which we operate.

Variable compensation (annual incentive performance bonus)

Payment of variable compensation is determined by the nature of the business, role, location and performance of the employee. Unless there is a contractual obligation, an incentive performance bonus is solely at the discretion of the Group.

• The cash bonus component is aimed at rewarding and driving performance above and beyond the requirements of the job function and providing greater earning potential for employees who exceed predetermined targets. In addition, we may pay commissions to employees operating in specific areas of the business where such compensation practices are warranted. The value of commissions paid is determined by formulae, which are reviewed regularly to ensure that they remain competitive.
  
  
• The share-based bonus component is designed to promote employee retention and align employee and shareholder interests. Share-based compensation programs are typically based on a mandatory deferral rate. The mandatory deferral means only part of the bonus is received in cash, with the remainder in share-based compensation awards.
  
  
• We also have employed other long-term incentive bonus plans or programs to assist in hiring at competitive levels and to support the retention of talent.