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UBS chops bonus pool, increases stock

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The deals that Big Finance was cranking out for years were often ridiculously large and unsustainable and so were the bonus payouts. Many of these organizations have shifted a lot of pay over to stock so that the deal makers are more deeply tied to the long term success of the business, but it's still unusually high compared to other industries. Long term, even the trimmed compensation plans are well above what the industry (and their investors) can sustain. Bloomberg:

UBS AG, Switzerland’s biggest lender, cut its 2011 bonus pool by 40 percent and investment bank chief Carsten Kengeter waived any variable pay entitlement as his division posted a second consecutive quarterly loss. The bonus pool, including pay deferred into future years, fell to 2.57 billion Swiss francs ($2.8 billion), from 4.25 billion francs in 2010, the Zurich-based bank said today. The pool at UBS’s investment bank is down 60 percent. “I don’t see how compensation should stay the same or go up if profitability of the banking industry is going south,” Chief Executive Officer Sergio Ermotti told reporters in Zurich today. “We’re trying to strive for a situation in which both the shareholder and employee can have a win-win situation.”

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