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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