NEW YORK: The unthinkable is happening - at least in Switzerland.
Three former officials of UBS, the troubled Swiss financial giant, have said they will forgo more than US$27 million (S$40 million) in compensation.
Over in the United States, however, many banks are still resisting calls to rein in executive pay.
Mr Marcel Ospel, the former chairman of the board at the Swiss bank, plus former directors Stephan Haeringer and Marco Suter, say they will give up pay promised to them, after the bank reported nearly US$50billion in losses and received even more than that in financial support from the Swiss government.
Mr Ospel will contribute more than two-thirds of the US$27million total; the balance will come from Mr Haeringer and Mr Suter.
In response, UBS issued a very brief statement: 'We welcome the decision.'
The former UBS executives had been the focus of intense public criticism after the bank reported stunning losses on devastating subprime-related investments.
This month, the bank announced that its chairman, Mr Peter Kurer, chief executive Marcel Rohner and members of its executive board would also have a bonus-free year this year.
'This is almost unheard of,' Professor Dirk Jenter, an assistant professor of finance at the Stanford Graduate School of Business, said of the executives' move. 'They've clearly been shamed into it.'
But shame has been much less effective in the US, where companies have resisted cutting bonuses and salaries even as their businesses crater.
Only in recent weeks have companies receiving taxpayer assistance, including Goldman Sachs and Citigroup, agreed to reduce or eliminate bonus payments to current executives.
On Tuesday - under pressure from New York attorney-general Andrew M. Cuomo - American International Group (AIG), the troubled insurance conglomerate now on life support from the US government, said the company would not pay any bonuses to its top seven executives this year and that the top 60 executives would not receive any pay increase through next year.
In addition, AIG chief executive Edward Liddy will receive just US$1 in salary both this year and next.
Those limits are a 'positive step', Mr Cuomo said in a statement. 'It is only fair that top executives, who benefit the most when firms do well, should also bear the burden of the difficult economic consequences their firms now face.'
Perhaps of more long-term significance are changes in compensation structures now under consideration in corporate boardrooms. AIG, for example, also announced that its chief executive would receive no severance and such payments to senior management would be limited.
Last week, UBS announced that, as of next year, a maximum of one-third of an annual bonus will actually be paid at the end of the year, with the rest held in escrow. The amount in escrow could be reduced if UBS subsequently suffers poor results, or if regulations are violated or unnecessary risks taken.
Asked whether US executives might follow the Swiss example, Prof Jenter was sceptical.
'I would not put my money on it,' he said. 'It certainly seems unlikely.'
