Credit Suisse execs take 40 percent bonus cuts after outcry

Credit Suisse's chief and other top executives offered on Friday to have their bonuses slashed by 40 percent, following investor concern over the size of their proposed compensation packages.

Credit Suisse execs take 40 percent bonus cuts after outcry
Credit Suisse chief Tidjane Thiam and the bank's executive board offered to cut their bonuses. Photo: Fabrice Coffrini/AFP

Credit Suisse chief Tidjane Thiam and the bank's executive board proposed that the “long-term incentive awards for 2017 and short-term incentive awards for 2016 … be reduced by 40 percent each,” according to a statement.

The board of directors would also leave its compensation unchanged at the same level as 2015 and 2016, and would not accept a proposed incremental increase, it added.

“My highest priority is to see through the turnaround of Credit Suisse which is under way,” Thiam said in a letter to shareholders published on riday.

“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,” he added.

The move came after Credit Suisse's compensation committee last month proposed handing Thiam and the bank's 12 other executive directors 26 million Swiss francs ($26 million, €24 million) in short-term bonuses for 2016 and up to 52 million francs in long-term bonuses.

Ahead of its annual meeting on April 28th, Switzerland's second largest bank has also asked investors to give chief executive Tidjane Thiam nearly 12 million francs in total for his first full year on the job in 2016, after short and long-term bonuses were added to his 3.7-million-franc salary.

The compensation committee had also proposed boosting compensation to the board of directors to 12.5 millions Swiss francs this year.

Several investor advisory groups have voiced outrage over the proposed bonuses, pointing to the bank's $2.7-billion net loss in 2016 following a massive $5.28-billion settlement with US authorities over its role in the sub-prime crisis.

Ethos, which advises major Swiss pension funds and other tax-exempt institutions, described the proposed bonuses as “excessive”, insisting that Credit Suisse's “executive management should not have received a bonus in 2016 given the disappointing results of the bank”.

Amid market turbulence and legal woes, the bank's stock price plunged more than 30 percent last year.

And as it dramatically reorganised its operations, it slashed 7,250 jobs over the course of 2016, with nearly the same number of jobs expected to go this year.

In a separate letter to shareholders Friday, chairman of the Credit Suisse board Urs Rohner stressed the board's “high degree of satisfaction with the performance of the CEO and the Executive Board in 2016.”

But he added that “in light of the current environment and sentiment towards compensation, the board of directors understands the decision made by the CEO and the executive team … (and) accepts these voluntary and personal decisions with great respect.”


Probe unearths second spying case at Credit Suisse

An internal Credit Suisse probe confirmed Monday that a second executive had been spied on, following earlier revelations that the bank's former head of wealth management was tailed by private investigators.

Probe unearths second spying case at Credit Suisse
Photo: Depositphotos

But Switzerland's number two bank maintained that just one senior leader, who has since been forced out, was entirely to blame for both incidents and that rest of the top brass had not been aware of the activities. 

Releasing the investigation conducted by the Homburger law firm, Credit Suisse said that “it has been confirmed that Peter Goerke, who was a Member of the Executive Board at the time, was placed under observation by a third-party firm on behalf of Credit Suisse for a period of several days in February 2019.”

The probe was launched following media reports last week that spying at Credit Suisse ran deeper than one case.

The banking giant was shaken by the discovery last September that surveillance had been ordered on star banker and former wealth management chief Iqbal Khan.

READ: Credit Suisse boss resigns following spying scandal

Kahn was tailed after he jumped ship to competitor UBS, sparking fears he was preparing to poach employees and clients.

That revelation came after Khan confronted the private investigators tailing him, leading to a fight in the heart of Zurich. Khan pressed charges.

An initial investigation by Homburger blamed former chief operating officer Pierre-Olivier Bouee, who stepped down, but found no indication chief executive Tidjane Thiam was involved.

The probe results released Monday echoed those findings, concluding that Bouee “issued the mandate to have Peter Goerke put under observation.”

“As was the case with Iqbal Khan, this observation was carried out via an intermediary,” it said, stressing that Bouee “did not respond truthfully” during the initial investigation “when asked about any additional observations and did not disclose the observation of Peter Goerke.”

The new investigation also did not find indications that Thiam or others in the board or management “had any knowledge of the observation of Peter Goerke until media reported on it,” the statement said.

“The Board of Directors considers the observation of Peter Goerke to be unacceptable and completely inappropriate” it said, adding that it had issued an apology to Goerke.

It added that “safeguards” were already in place to avoid future similar misconduct. Switzerland's market watchdog FINMA meanwhile said last week that it was “appointing an independent auditor to investigate Credit Suisse in the context of observation activities.”

“This investigator will clarify the relevant corporate governance questions, particularly in relation to the observation activities,” a statement said Friday.