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These announcements follow heavy public criticism in the US as well as Europe over banks paying bonuses after being bailed out by governments.



Top management at several multinational banks will forgo bonuses this year as a result of the financial crisis and the fact that governments had to pour billions into banks to keep them afloat. The multinationals that won't be paying their top managers bonuses include UBS, Goldman Sachs, Morgan Stanley, Merrill Lynch, and Deutsche Bank.



Some went further and announced reforms in compensation structures for top bankers. UBS said that the pay structure for all top staff will be revised from 2009. Firstly, the Swiss bank's chairman, Peter Kurer, will no longer be bound to the same incentive system as the Executive Board. He will be restricted to a single base salary in cash and a fixed number of shares to avoid conflict of interest. Compensation for the bank's top executives (2-3 percent of staff, according to the Financial Times) will also be revised to encourage long-term performance and take into account business risk. Under the changes, variable cash and equity compensation will be based on a bonus/malus system. A maximum of one-third of the annual variable cash component will be paid out at year's end and the larger portion of this will be held in escrow in a bonus account.The shares will vest only after three years, and members of top management are obliged to hold these shares for an even longer period.



Morgan Stanley will also attach a string to its annual bonuses. Part of employees' remunerations will be subject to a three-year claw-back provision: the bank could take back some of a bonus if an employee causes significant financial losses or reputational damage to the company. Changes will affect some 7,000 employees, said the New York Times.



Credit Suisse, the Swiss-based financial giant, announced that it would pay part of its top bankers' bonus using some of the bank's illiquid assets. This unusual plan will prevent the bank to make further writedowns on those assets because a fluctuation in their value will be offset by corresponding gains or losses on its liabilities to employees.



On the other hand, Kenneth Lewis, Bank of America's CEO, and Vikram Pandit, Citigroup's CEO, have not yet official announced if they will ask for a bonus this year. Mr. Rubin, an influential top adviser at Citigroup and former Treasury Secretary, said he will not request a bonus.





To read the new UBS's compensation plan: