Credit Suisse said on Friday top executives around Chief Executive Tidjane Thiam and chairman Urs Rohner will relinquish millions in lucrative bonus schemes. The Swiss bank is bowing to shareholder power in a dispute over excessive pay.
The Swiss bank has been battered by weeks of critical pay headlines, amid opposition from influential shareholder groups to million-franc rewards for top management and board bonuses, in a year when the bank's stock price plunged by one-third.
Just after midnight on Friday, the bank put out a statement effectively admitting it had gone too far in wanting to pay its chairman Urs Rohner nearly 4 million Swiss francs and its Chief Executive Tidjane Thiam 11.9 million francs last year.
«It is fair to say however that some shareholders expressed reservations regarding certain aspects of our compensation including the total level of compensation of the board of directors,» Rohner said in a letter to shareholders.
Risky Pay Vote
The reality is that Credit Suisse ran the risk of Switzerland's first no-vote on specific pay items since such rules were introduced into Swiss law three years ago. As a result, Thiam and the 11-person top management around him are proposing to curb their short- and long-term bonus schemes by 40 percent.
Thiam is the only top executive whose pay is publicly disclosed; that of operating chief Pierre-Oliver Bouee and other top executives is only reported as a pool. In Thiam's case, the cut translates to nearly 3.5 million francs less in pay for last year.
«I hope that this decision will alleviate some of the concerns expressed by some shareholders and will allow the executive team to continue to focus on the task at hand,» Thiam said in a letter to shareholders.
Rohner's Cut
The bank also said its board will voluntarily keep its pay at last year's level, which for chairman Rohner translates to nearly 18 percent cut in pay from an originally proposed 3.9 million francs.
The back-down comes after Credit Suisse emerged at the center of an international pay brouhaha, ahead of what promises to be a spirited shareholder meeting later this month.
Shareholders were unhappy that the bank hiked pay across the board in a loss-making year in which it paid billions to settle a damaging mortgage security mis-selling probe in the U.S., and as it reportedly prepares to tap shareholders for a cash injection.
While Swiss shareholders have always been very critical of the bank's pay policies, this year opposition has spilled over into international circles, including influential Institutional Shareholder Services, or ISS, as well as Glass Lewis and Swiss-based Ethos Fund, which called for Rohner to go.
Investor Pushback
Credit Suisse said it took the step after a board member tasked with pay, Jean Lanier, got pushback from shareholders over bonuses, but not the bank's strategy and set-up.
«Feedback on the whole has been supportive on the strategy and its execution, however, it is clear that there are some shareholders who have reservations,» over pay, Credit Suisse said.
The bank's strategy has been focused on bolstering business with Asia while paring back risk-taking at its historically influential and weighty investment bank, in favor of more business with the wealthy.
Capital remains a major worry for Credit Suisse. The bank is reported to have pulled back from listing a minority stake in its valuable Swiss business, in favor of an outright cash call from shareholders instead.
