Credit Suisse pay packages draw more ire

ZURICH • Credit Suisse Group is facing growing opposition to its bonus plans for executives and directors, with a third advisory group recommending shareholders reject this year's pay packages as excessive.

Institutional Shareholder Services is advising investors at this month's annual meeting to vote against proposals to pay 26 million francs (S$36.5 million) in short-term bonuses and as much as 52 million francs in long-term bonuses to the bank's executive board. It also opposes a plan to increase compensation for the board of directors to 12.5 million francs.

"Despite a second consecutive net loss, variable remuneration levels for the executive board remained high, including a 4.17-million-franc short-term incentive for the chief executive officer," the group said in an e-mail report on Tuesday. "The level of board compensation at Credit Suisse is among the highest for blue-chip Swiss Market Index companies."

If only half the shareholders follow the recommendations on April 28, Credit Suisse would become the first bank to have its pay packages declined under Switzerland's so-called fat-cat laws.

The lender last year won shareholder backing despite opposition from two advisory groups. This year's vote may be tighter.

Glass Lewis & Co also says the proposed short-term bonuses for executives and the compensation plan for the board are inappropriate, given the loss suffered by shareholders in the last two fiscal years.

Geneva-based Ethos, which advises major Swiss pension funds that may represent up to 5 per cent of the bank's market capitalisation, is recommending voters reject all agenda items related to pay for executives and directors.

Swiss laws introduced in 2015 require companies listed in the country to give shareholders a binding annual vote on executive pay. Lavish packages for bankers have become controversial with taxpayers, especially since 2008 when they bailed out UBS Group, the country's biggest bank.

Credit Suisse cut some 7,200 jobs last year and plans to eliminate thousands more this year.

Under CEO Tidjane Thiam, the bank has reorganised operations and scaled back investment banking to free up capital for wealth management. "We take note of the recommendations put forward," said Mr Tobias Plangg, a spokesman for the bank. "Credit Suisse respects shareholder democracy."

Credit Suisse is asking 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 are to receive total pay of 5.9 million francs on average.

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A version of this article appeared in the print edition of The Straits Times on April 13, 2017, with the headline 'Credit Suisse pay packages draw more ire'. Print Edition | Subscribe