UBS Bonus Plan Gives Bankers Incentives to Take Less Risk

Frederick Tung, School of Law

UBS AG (UBSN)’s plan to pay part of top employees’ bonuses in bonds that can be wiped out will give traders and bankers an unfamiliar incentive: limit risk…

Expert quote:

“A bond has a fixed upside — they don’t get paid any more for taking big risks. If you substitute bond compensation for stock compensation, you essentially steer their incentives toward more conservative strategies.”

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