Credit Suisse Group AG leaders including chief executive officer Tidjane Thiam offered to have their variable pay awards cut 40 per cent after a growing chorus of investor advisory groups opposed the packages ahead of this year’s annual meeting.
Mr Thiam and the executive board volunteered to shrink long-term incentive awards for 2017 and short-term incentive awards for 2016, according to a statement early Friday on the Zurich-based bank’s website. Total board compensation will stay at the level of 2015 and 2016, with no incremental increase in 2017 as previously proposed, according to the statement.
Tidjane Thiam, chief executive officer of Credit Suisse Group. Photo: Bloomberg
This week, Institutional Shareholder Services joined other advisers in denouncing 26 million francs ($US26 million) in proposed short-term bonuses and as much as 52 million francs in long-term bonuses for the executive board. The awards are too rich for a company that has posted two consecutive annual losses, ISS said. It also criticised a plan to boost compensation for the board of directors to 12.5 million francs.
“Feedback on the group’s strategy and its execution has been supportive,” Credit Suisse said in its statement.
“There were, however, some shareholders who expressed reservations relating to the variable compensation granted to the executive board.”
Swiss law requires companies listed in the country to give shareholders a binding annual vote on executive pay. Credit Suisse’s investors are scheduled to meet on April 28.
Credit Suisse’s stock fell 33 per cent in 2016, with market turmoil, surprise trading losses and legal cases sapping confidence in a costly turnaround plan. Under Mr Thiam, the company has reorganised operations and scaled back investment banking to free up capital for wealth management.
The firm cut some 7200 jobs last year and plans to eliminate thousands more this year.
Credit Suisse had asked investors to award Mr Thiam 11.9 million francs for his first full year on the job, including more than 4 million francs each in short-term and long-term compensation on top of a salary of 3 million francs. Ten other full-year members of the executive board were to receive total pay of 5.9 million francs on average.
Glass Lewis & Co and Geneva-based Ethos, which advises major Swiss pension funds that may represent up to 5 per cent of the bank’s market capitalisation, also criticised the bonuses. The pair had opposed executive and director compensation packages last year, as well, without success. Still, at that meeting, almost one in five shareholders voted to reject the proposed packages.