Some New Qjestions for Qjerker

Before we begin, could you please tell your assembled subjects whether you arrived in New York from London via private jet, or whether you drove, preferably a hybrid vehicle?

1. In the 4th quarter, it is widely rumored that UBS had one specific trade (and perhaps an accompanying, offsetting hedge) that went bad and on which UBS lost a material amount of money.  

a.  Is that true?  

b.  What was your involvement with it?

c.  Did this trade adversely affect the Investment Bank's bonus pool?

2. Similarly, it is rumored that, like Goldman Sachs, UBS had a large loss/writedown (may be disclosed on the call) associated with a loan to Lyondell-Basell.

a.  Is that true?  

b.  What was your involvement with it?

QUESTIONS RE INVESTMENT BANK "BONUS POOL" &EMPLOYEE RETENTION:

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1.  UBS stated that approximately USD$1.1bn (CHF 1.3bn) of its bonus pool allotment out of a total of USD$1.7bn (CHF 2.0bn) was "contractual" which constitutes approximately 67% of the total bonus pool.  

a.  How many bankers will share the USD$1.1billion (in other words, what is the size of the average "contract")?  

b.  Given 67% of the bonus pool must be paid contractually, what percentage of total employees do those receiving a contractually-guaranteed bonus represent?  In other words, 67% of bonus is being paid to what percentage of employees?   

c.  Is UBS willing to release the specific amount of each of these bonuses being paid to those receiving "guaranteed compensation," given the discriminatory nature of the compensation and the fact the Swiss National Bank had to "bail out" UBS?  Or, is UBS willing to release the names of the bankers receiving contractually-guaranteed payments?

d.  Did UBS attempt to recover any of these contractually-committed amounts, or did it attempt to re-negotiate these agreements in any way?  Was it successful in any case?  

e.  If bankers refused to renegotiate, did UBS seek to penalize them in any way, recognizing that so many lower-level employees will go substantially without any compensation for 2008 through no faults of their own?

f.  Would it be fair to say that since these payments are contractual and are likely being paid to high-level employees in leadership and management positions, that those responsible for UBS' disastrous results in 2008 are receiving most, if not all, of the "bonus pool" and that lower-level employees who have come to view year-end compensation more as a deferred portion of their salary are being disproportionately and unfairly targeted?

 

g.  Does UBS expect to be targeted with any legal action regarding its "bonus pool"?  

h.  Please state what CHF 2.1 billion for "Contractually-owed, revenue-based compensation of US WM financial advisors" is for exactly.  Please clarify if this compensation is on top of their commissions and regular compensation?

i.  Please state what CHF 319 million for "UBS Pactual contractually agreed variable compensation" is exactly.  How many individuals share in that?

j.  Please state what CHF 675 million for "Other contractual compensation and guaranteed payments" is exactly.  How many individuals share in that?

k.  Please describe for everyone the compensation models for the other two businesses of UBS.

l.  Would it be fair to say that you have failed to secure "market compensation" for the employees of the Investment Bank for 2008?  Was the elimination of a bonus accrual that existed for three quarters done to pacify the press and other critics in Switzerland at the expense of your employees?

2.  Since the Investment Bank, and especially the Investment Bank's Fixed Income division, had such a disastrous year, could UBS please disclose the contractually-guaranteed compensation that is plans to pay to the following executives of these businesses:

(in each case, please be very clear about the amounts being paid, the form of consideration, and exactly when "contractual" payments are to be received either now or at any time in the future)

a.  Jerker Johansson, CEO of the Investment Bank

b. Carsten Kengeter, Co-Head of Fixed Income Division of the Investment Bank

c. Jeff Mayer, Co-Head of Fixed Income Division of the Investment Bank

3.  In Congressional hearing, we keep hearing that "cash is fungible."  If that's the case, is any cash that was generated by the Investment Bank in 2008 being used to pay bonuses in Global Wealth Management or other areas of the firm?

4.  LAST year, UBS apparently was "avante garde" in its compensation practices, and capped the amount of CASH to be paid in a bonus to approximately USD$700k, which required the rest to be taken in UBS stock that has since plummeted by nearly 70%.  (This change was reportedly made extremely late in the compensation process, just days before bonuses were awarded).  This year, Goldman Sachs reportedly had a similar limit of $300k cash.  

a.  Is UBS paying out its contractually-guaranteed compensation according to the terms of its typical bonus plan (part cash part stock), or will it impose a cash "cap" on the amount paid according to these contracts, especially given that such a large amount of money is likely reserved for so few, and a relatively small amount of money is left over for the lower level employees?  

b.  If not, why not?  Presumably UBS could once again this year change the terms of its plan at its sole discretion to limit the amount of cash flowing out to these individuals. 

c.  Is it true that those who do receive a "bonus" that is not contractually-guaranteed will have those payments deferred, subject to "clawback" based on the future financial results of UBS but paid in CASH rather than UBS SHARES that won't benefit from strong future performance by UBS?  If that is so, is that also the case with those receiving contractual payments?  Or do those individuals with contractually-guaranteed payments have more attractive terms and conditions from the compensation plans that were in effect at the time they SIGNED their contracts?

5.  Is it true that UBS just paid substantial severance (reported to be 25% or more of the respective employee's 2006 bonus, or more) and accelerated the vesting of deferred compensation and other items for employees it made redundant in December?   

a.  If that's true, would it be accurate to say that the lower-performing employees who were made redundant at the end of 2008 received more compensation for 2008 than the employees who remain with UBS today?  Is that sensible for employee morale and retention?

b.  Could you comment on the fairness of that scheme and how that might affect retention of your higher-performing employees who remain with UBS?

c.  Do you expect there to be a significant exodus of your most talented bankers following the next scheduled vesting date of past deferred compensation, reported to be approximately 1 March 2009?

6.  In light of Friday's Wall Street Journal article that articulate the Investment Bank's leaders' belief that once UBS announces its results and "vision" on 10 February that its bankers will have to choose either to "defend the franchise and fight to continue" or "allow it to disintegrate and destroy itself," could you elaborate on YOUR PERCEPTION of the employee morale at the Investment Bank right now?

7.  It has been widely reported that UBS has attempted to sell the Investment Banking business.

  

a.  Could you comment on recent attempts around that?

8.  When and how do you envision changing the Investment Bank's compensation structure going forward?  If the Investment Bank compensation will, in the future, continue to depend upon the performance of the entire Group, please clarify if 2009 "profitability" depends upon:

a.  marks on the CHF 20bn of "toxic assets" UBS just agreed to take back on balance sheet

b.  the Leveraged Loan book

c.  amortization of guaranteed compensation used to recruit new US WM professionals at what the press is describing as "above market or unprecedented" rates

d.  possible settlement related to US Tax Evasion case in WM

9.  Please be very clear about the current discussions regarding accelerating EOP and whether that would be "free and clear" to employees, or whether it would just secure a loan/advance?

10.  Please discuss the additional 2,000+ jobs that are slated to be eliminated from the Investment Bank?  Is yours one of them?