Credit Suisse pay cuts ‘too little too late’

Published Apr 18, 2017

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Switzerland - Credit Suisse Group AG’s efforts to avoid a

shareholder revolt over compensation for top executives and directors have

failed to convince at least one main opponent.

Glass Lewis & Co. continues to recommend investors

reject the bank’s pay proposal for the board even after directors offered to

keep their maximum compensation at 12 million francs ($12 million). Previously

the bank planned to raise the ceiling to 12.5 million francs.

While the advisory group backed the bank’s offer to

reduce executive bonuses by 40 percent to 17 million francs, it continues to

have reservations about variable incentive pay, especially for Chief Executive

Officer Tidjane Thiam.

“We believe this action is a positive response to notable

shareholder discontent leading up to the annual general meeting and should

generate some goodwill,” Glass Lewis said in a report emailed Tuesday.

“However, we also find that this is a case of "too little too late."

“Indeed, a situation in which top executives feel obliged to

volunteer to reduce their own earned awards two weeks prior to an annual

meeting facing a shareholder revolt highlights the dysfunction of a

compensation program and a compensation committee that fail to adequately

consider shareholder interests.”

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Credit Suisse has come under fire from major shareholder

groups over its compensation plans for executives and directors after the bank

posted a second annual loss. Swiss laws introduced in 2015 require companies

listed in the country to give shareholders a binding annual vote on executive

pay. The bank’s annual meeting is next week.

At 3 million francs, Thiam’s salary remains “significantly

higher” than that of his predecessor, Brady Dougan, Glass Lewis said. Under the

new proposals, Thiam would receive a total of 10.24 million francs, instead of

the previously proposed 11.9 million francs.

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. Charges tied to a legal settlement over its crisis-era

mortgage securities business pushed the bank into another annual loss.

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