Credit Suisse investors told to nix bonuses
Glass Lewis & Company is advising that Credit Suisse shareholders rejected the bank’s proposal to pay Sf26m (R356.5m) in short-term bonuses to its board.
The amount appears “wholly inappropriate given the loss suffered by shareholders in the last two fiscal years”, the proxy adviser said in its recommendations for the bank’s annual meeting on April 28.
Swiss law requires companies listed in the country to give shareholders a binding annual vote on executive pay.
Lavish packages have become controversial with taxpayers, especially since 2008 when they bailed out UBS, the country’s biggest bank.
The politician who pushed through the so-called fat-cat restrictions, Thomas Minder, has spoken out against Credit Suisse’s executive compensation plans
Credit Suisse’s stock fell 33% in 2016, with market turmoil, surprise trading losses and legal cases sapping confidence in a costly turnaround plan.
JOBS ON THE LINE
Under CEO Tidjane Thiam, the bank has reorganised operations and scaled back investment banking to free up capital for wealth management. Credit Suisse cut about 7,200 jobs in 2016 and plans to eliminate thousands more in 2017.
“We take note of the recommendations put forward,” the bank said on Wednesday. “Credit Suisse respects shareholder democracy.”
Credit Suisse is asking investors to award Thiam Sf11.9m for his first full year on the job, including more than Sf4m each in short-term and long-term compensation on top of a salary of Sf3m. Ten other full-year members of the board are to receive total pay of Sf5.9m on average.
While many shareholders may view Thiam’s contribution as “largely positive and key to the long-term recovery of the company”, his short-term variable compensation “should be more reflective of shareholders’ experiences”, Glass Lewis said. It endorsed the proposals for fixed pay and long-term bonuses for top executives.
SWISS LAW REQUIRES COMPANIES LISTED IN THE COUNTRY TO GIVE SHAREHOLDERS AN ANNUAL VOTE ON EXECUTIVE PAY
Credit Suisse is said to be considering selling shares as an alternative to a plan to raise capital by listing part of the Swiss business. The bank tapped investors for about Sf6bn in 2015. Glass Lewis said investors should vote against the re-election of Andreas Koopmann, Iris Bohnet and Kaikhushru Nargolwala to the board. The three sit on the compensation committee, which the group said had not done enough to address investor concerns about executive pay.
“We believe shareholders should be seriously concerned that the company continues to pay out significant, near-maximum opportunity bonuses despite reporting a material loss for the second consecutive year,” Glass Lewis said.