Does Credit Suisse's loss-making year mean a «donut» instead of a bonus for CEO Tidjane Thiam? A lobby of Swiss banking's rank and file thinks so.
The Swiss bank's boss, Tidjane Thiam, doesn't deserve to take home a juicy bonus after Credit Suisse posted its third-consecutive net loss, according to a lobby of banking employees.
Credit Suisse is entering the final quarters of the CEO's three-year invasive overhaul, but hasn't managed to post a profit yet. The Zurich-based bank's profits last year were wiped out by changes to tax law in the U.S., leading to a loss of 983 million Swiss francs (before tax, the bank swung to a 1.8 billion franc profit from a 2.3 billion franc year-ago loss).
On trading floors, a zero-bonus round is known as getting «blanked» or getting a «goose egg» or «donut». Pay was a hotly-contested issue last year, when Thiam and other top executives and board members were forced to climb down from their bonus plans due to massive shareholder opposition.
Chances Slim to None
This year, the French-Ivorian CEO can clearly demonstrate the bank's improved health, as finews.com reported on Wednesday. Nevertheless, the lobby group, Schweizerischer Bankpersonalverband or SBPV, said Thiam and his lieutenants shouldn't draw a bonus.
«The SBPV expects Credit Suisse's leadership to voluntarily relinquish any variable compensation for top management and board members,» the lobby said in a statement. Instead, the bank should invest funds in better equipping its 17,000 staff in Switzerland for future challenges like digitization, the SBPV said.
Signature vs Hard Work
Credit Suisse said it is in regular contact with the association and that there is no link between the tax-wrought loss and its performance, without addressing the lobby's specific demands. The odds of Credit Suisse's management under Thiam abiding by the lobby's request are slim to none. Top management's pay is disclosed in March but the CEO's temper flared already flared this week when he was asked whether the loss-making year should hit his bonus.
Thiam responded by asking angrily whether one signature – U.S. President Donald Trump's on the tax legislation which erased Credit Suisse's profits last year – should outweigh 12 months of management's hard work. Thiam's pay totalled 11.9 million francs last year before top management agreed to a 40 percent cut in their short- and long-dated bonuses schemes.
Call for Culture Shift
The lobby's demands addresses the widening pay gap between the rank and file, where bonuses have fallen steadily, and compensation for star CEOs and turnaround managers like Thiam, who has persuaded shareholders to pony up 10 billion francs in capital and cut thousands of jobs.
«Meritocracy and performance are top management's buzzwords when it comes to staff. Now it's time for a cultural shift towards new benchmarks in variable compensation,» the lobby said.
Thiam isn't the best-earning banker in Europe or even just in Switzerland: both those honors go to his crosstown rival Sergio Ermotti at UBS, who took home 13.7 million francs in 2016.
