Credit Suisse boosts bonus pool, CEO gets $12 million

Credit Suisse Group AG chief executive Tidjane Thiam’s pay for his first full year in the job swelled to 11.9 million Swiss francs ($12 million), while bonuses rose 6% despite back-to-back annual losses at Switzerland’s second-biggest bank.

Executive pay is a hot-button issue in Switzerland, with voters backing a “fat cat” referendum in 2013 giving shareholders a binding vote on pay.

Thiam’s pay packet followed a near-three billion franc loss at Credit Suisse in 2016 amid a major restructuring and penalties for the sale of toxic mortgage debt in the run-up to the financial crisis.

“Overall, the board considered Mr Thiam’s strong leadership, consistent execution of the group’s communicated strategy, effective delivery of cost efficiencies, principled and ethical conduct, and his role in driving the group towards a stronger capital position in determining that Mr Thiam had met his performance targets set for the year,” the bank said in its annual report yesterday.

Thiam, a former Ivorian government minister who is reshaping the bank by boosting wealth management and scaling back investment banking, earned 4.57 million francs in 2015 after joining Credit Suisse from British insurer Prudential Plc at mid-year. He had requested a 40% bonus cut that year.

Chairman Urs Rohner’s compensation rose to 3.98 million francs in 2016 from 3.2 million. The bank’s bonus pool increased to 3.09 billion francs.

Rival UBS AG paid CEO Sergio Ermotti 13.7 million francs last year and cut its bonus pool by 17% to 2.9 billion francs. Deutsche Bank AG CEO John Cryan took home €3.8 million ($4.1 million) last year.

Credit Suisse upped its net loss for 2016 to 2.71 billion francs from 2.44 billion after agreeing in principle to settle a residential mortgage-backed securities (RMBS) case with the National Credit Union Administration Board in the United States.

This cut the bank’s common equity tier 1 ratio, a closely watched measure of balance sheet strength, to 11.5% from 11.6%, heightening its need to raise capital.

Credit Suisse’s current plan is to raise up to four billion francs via an initial public offering (IPO) of a minority stake in its Swiss banking division.

However, it is also considering a quickfire share sale at group level and its board of directors is set to decide in April how to proceed, Reuters has reported.

A speedy share sale via a so-called accelerated bookbuilding (ABB) could be a simpler solution, according to Bernd Ackermann, who covers Credit Suisse for S&P Global Ratings.

“In terms of the money it can raise, it is neutral to our ratings if it’s through the IPO or an accelerated bookbuilding,” Ackermann told Reuters on Thursday.

“But it could be better not to have the more complicated, fragmented structure you’d get through the IPO.”

One hurdle to clear for an ABB is the amount of new stock shareholders authorise the bank to issue.

In its invitation to next month’s annual meeting, Credit Suisse proposed increasing its authorised capital only for its scrip dividend.