Credit Suisse raises CEO’S pay 34pc

The Pak Banker - - COMPANIES/BOSS -

Credit Suisse Group AG (CSGN), the sec­ond- big­gest Swiss bank, raised Chief Ex­ec­u­tive Of­fi­cer Brady Dougan’s to­tal com­pen­sa­tion by 34 per­cent for 2012, a year when net in­come de­clined.

Dougan’s pay of 7.77 mil­lion Swiss francs ($8.2 mil­lion) in­cluded fixed salary of 2.5 mil­lion francs, 3 mil­lion francs in short-term and 2 mil­lion francs in long-term vari­able com­pen­sa­tion, the Zurich-based bank said in its an­nual report to­day. Dougan was paid 5.82 mil­lion francs for 2011.

The high­est-paid mem­ber on Credit Suisse’s ex­ec­u­tive board was Robert Shafir, who cur­rently co-heads the pri­vate bank­ing and wealth man­age­ment di­vi­sion. He earned 10.59 mil­lion francs for 2012 com­pared with to­tal pay of 8.5 mil­lion francs for 2011.

The bank’s net in­come fell to 1.35 bil­lion francs in 2012 from 1.95 bil­lion francs the pre­vi­ous year, in­clud­ing the cost to set­tle lit­i­ga­tion against the com­pany an­nounced last week and ac­count­ing charges re­lated to its own debt. Ex­clud­ing such charges and gains from the sale of real es­tate, stakes and units, profit al­most dou­bled to 3.58 bil­lion francs. Dougan said in an in­ter­view this month that pay for bankers is still out­pac­ing share­holder re­turns, a dy­nam- ic that will change once the bank com­pletes an over­haul of its busi­ness model.

“In the past few years, cer­tainly, the share­hold­ers have taken a big­ger re­duc­tion in their re­turns than la­bor has within the busi­ness model,” Dougan, 53, said in the in­ter­view with Bloomberg Tele­vi­sion’s Erik Schatzker. “That’s not sus­tain­able. That’s not right.”

Credit Suisse said to­day it changed the com­pen­sa­tion struc­ture for its ex­ec­u­tives af­ter feed­back from share­hold­ers. Ex­ec­u­tives’ bonuses for 2012 were made up of short- term awards, which in­cluded un­re­stricted cash and shares vest­ing over the coming three years, and a longterm de­ferred cash award vest­ing in the third, fourth and fifth years af­ter the grant.

The bank also pub­lished tar­get and cap bonus lev­els for the CEO and ex­ec­u­tive board mem­bers, ex­pressed as mul­ti­ples of base salary, and said they can be cut to zero if per­for­mance goals are not met. The tar­get bonuses are aligned with com­pet­i­tive pay lev­els for com­pa­ra­ble roles in the mar­ket, the com­pany said. Credit Suisse said that no ex­ec­u­tive was awarded a bonus reach­ing his or her cap level for 2012.

Swiss vot­ers in a ref­er­en­dum ear­lier this month backed a pro­posal giv­ing share­hold­ers a bind­ing vote each year on ex­ec­u­tive pay as part of an ini­tia­tive that also bans big pay­outs for new hires and de­part­ing ex­ec­u­tives.

“We be­lieve in the eq­ui­table shar­ing of the fu­ture eco­nomic gains of Credit Suisse be­tween its share­hold­ers and its em­ploy­ees, and we will work to achieve a bet­ter balanced distri­bu­tion to this ef­fect go­ing for­ward,” Aziz R. D. Syr­i­ani, chair­man of the com­pen­sa­tion com­mit­tee, said in the report, adding that the board’s re­view will in­clude the Swiss vote on pay. The bank also plans to restart buy­ing shares in the mar­ket to meet de­liv­ery obli­ga­tions un­der stock awards af­ter its Swiss core cap­i­tal ra­tio, which stood at 9 per­cent on Dec. 31, ex­ceeds 10 per­cent.

Credit Suisse fell 1.6 per­cent to 24.91 francs by 10:16 a.m. in Swiss trad­ing. The shares rose 0.9 per­cent last year, lag­ging be­hind the 23 per­cent gain in the Bloomberg Europe Banks and Fi­nan­cial Ser­vices In­dex, which tracks 40 com­pa­nies, and a 28 per­cent in­crease at UBS AG (UBSN) (UBSN), the big­gest Swiss bank.

The bank pro­posed to pay 10 cen­times in cash and 65 cen­times in shares as its div­i­dend for 2012 af­ter let­ting share­hold­ers choose the pre­vi­ous year whether they wanted 75 cen­times a share in cash or in stock to help the com­pany build up cap­i­tal ra­tios.

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