Swiss pension-backed proxy firm slams “completely inappropriate” Credit Suisse bonuses

Swiss proxy firm Ethos has blasted the CHF34.6m (€31.4m) bonus that Credit Suisse wants to pay its management board for 2015, calling it “completely inappropriate” given the bank’s performance last year.

For 2015, Credit Suisse reported a net loss of CHF2.9bn owing in large part to a write-down of a US-based investment bank it acquired in 2000. The huge loss prompted the bank to announce a round of intense cost-cutting, including the loss of up to 6,000 jobs. Credit Suisse’s share price, meanwhile, has plunged 35% since the start of 2015 to trade at just above €13.

Despite these troubles, the bank proposes giving its management board, headed by CEO Tidjane Thiam, a CHF34.6m bonus for last year. “This is unacceptable considering the bank’s loss in 2015, its lack of solidarity with those who are losing their jobs and its share price,” Ethos Director Vincent Kaufmann told Swiss newspaper Tagesanzeiger.

Kaufmann is also unhappy both with the level of Thiam’s fixed pay of CHF3m – it is above the CHF1.6m average for other companies traded on Switzerland’s SMI index – and with his recruitment bonus. As a condition of joining Credit Suisse from UK life insurer Prudential last June, Thiam was promised CHF14.3m worth of stock options over three years. The first tranche will be paid in June.

“We have a problem with the bonus as it is not linked directly to Thiam’s performance.We would prefer that the bonus be paid once his strategy of turning the bank around proves successful,” Kaufmann told the Tagesanzeiger. Ethos, which represents the interests of 220 Swiss pension schemes and foundations, is urging fellow shareholders in Credit Suisse to vote against the pay package for management at the bank’s annual general meeting (AGM). The bank will hold its AGM on April 29 in Zurich. During Credit Suisse’s last AGM, 30% of the bank’s shareholders voted against management’s compensation for 2014 and another 3% abstained.

Due both to the bank’s performance in 2015 and the handling of executive pay, Ethos also believes Credit Suisse shareholders should deny discharge of bank’s supervisory board, chaired by Urs Rohner. Under Swiss, granting discharge means that shareholders relieve managers or board directors of legal liability for the year before, though it’s also a vote of confidence.

But Ethos is in favour of Rohner’s re-election as Chairman, as the bank has yet to find an appropriate successor.

Tagesanzeiger also reported that while ISS, the influential US proxy advisor, shared Ethos’ concerns about executive compensation at Credit Suisse, it was still recommending a yes vote at the AGM. Part of the reason, the newspaper says, is that ISS believes that the proposed bonus reflects the bank’s results for 2015.