Credit Suisse leaders cut their bonuses 40% after backlash

Bloomberg

Credit Suisse Group AG leaders including Chief Executive Officer Tidjane Thiam offered to have their bonuses cut by 40 percent after a growing number of investor advisory groups opposed the packages ahead of this year’s annual meeting.
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 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.
This week, Institutional Shareholder Services Inc. joined other advisers in denouncing 26 million francs ($26 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 criticized a plan to boost compensation for the board of directors to 12.5 million francs.
“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 wrote in a letter to investors posted on the bank’s website. “My highest priority is to see through the turnaround of Credit Suisse which is under way.”
In a separate letter, Chairman Urs Rohner said directors had accepted the offer with “great respect” and that the panel is highly satisfied with Thiam and the executive board’s performance during 2016.
“It’s the right move to show respect toward shareholders when investors are waiting for results from the bank’s turnaround plan,” said Francesco Confuorti, chief executive officer of Advantage Financial SA, a Milan-based investment firm. “Credit Suisse management inherited a heavy situation, but each manager, even if they’re starting from the bottom, should link bonuses to performance.”
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 percent in 2016, with market turmoil, surprise trading losses and legal cases sapping confidence in a costly turnaround plan. Under Thiam, the company has reorganized operations and scaled back investment banking to free up capital for wealth management. The firm cut some 7,200 jobs last year and plans to eliminate thousands more this year.
Credit Suisse had asked investors to award 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.