Statement of Financial Condition
UBS Securities LLC
Notes to the Statement of Financial Condition (continued)
(In Thousands)
9. Equity Participation and Other Compensation Plans
The Parent operates several equity participation and other compensation plans to align the interests
of employees with the interests of investors while continuously meeting regulatory requirements.
The Parent operates compensation plans on a mandatory, discretionary and voluntary basis.
Equity Ownership Plan ("EOP")
Certain employees receive a portion of their annual performance-related compensation above a
certain threshold in the form of EOP notional shares or EOP performance shares (i.e. notional
shares which are subject to performance conditions). Such performance requirements are currently
based on the Parent's adjusted return on tangible equity and the divisional return on attributed
equity over the defined financial years during vesting.
Notional shares represent a promise to receive UBS shares at vesting and do not carry voting rights
during the vesting period. Notional shares carry a dividend equivalent which may be paid in
notional shares or cash and which vests on the same terms and conditions as the awards, except
for certain regulated employees.
EOP awards generally vest in equal installments in years two and three. The plan includes
provisions that enable the firm to trigger forfeiture of some, or all, of any unvested award or portion
of an award (a) if an employee commits certain harmful acts and (b) in most cases of terminated
employment.
EOP expense is recognized in the performance year if the employee meets the retirement eligibility
requirements at the date of grant. Otherwise, the expense of each vesting portion of deferred
compensation is recognized from the grant date to the earlier of the vesting date or the retirement
eligibility date of the employee, on a straight-line basis.
Certain awards, such as replacement awards, may take the form of deferred cash under the EOP
rules.
Long Term Incentive Plan ("LTIP")
The LTIP is a mandatory deferred share-based compensation plan for senior leaders of the Group
i.e., Group Executive Board (GEB) members, Global Managing Directors (GMD)s and Vice
Chairs). The final number of notional shares delivered at vesting depends on two equally weighted
Long Term Incentive Plan ("LTIP") (Continued)
performance metrics: average reported return on CET1 capital (RoCET1) and relative total
shareholder return (rTSR), which measures UBS's total shareholder return against an index
consisting of global systemically important banks as determined by the Financial Stability Board.
These performance metrics are separately valued as of the date of grant and (re-)assessed over a
three-year performance period starting in the year of grant. For both metrics there is a threshold
level, which would result in a 33% payout, and a maximum level, which would result in a 100%
payout.
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