Credit Suisse struggles to quell pay revolt even after bonus cut

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Credit Suisse on Tuesday struggled to extinguish shareholder unrest over payouts to senior executives, even after top management offered to cut their bonuses by 40 per cent and its board of directors said it would freeze its pay.

Influential proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis both still advised shareholders to vote against bonus payments on offer to senior management at the Zurich-based bank’s annual general meeting on April 28.

Shareholders in Switzerland have veto power over management and board pay following a 2013 national referendum on the issue. If Credit Suisse shareholders reject the plan, it would be the first use of the Swiss veto at a leading company.

In an effort last week to head off growing unrest over the proposal to pay 78 million Swiss francs (£61.79 million) in bonuses to top executives, senior management led by Chief Executive Tidjane Thiam offered to cut 2016 payouts.

Nevertheless, ISS kept its opposition to the pay plan because Credit Suisse had not altered pay items up for a vote.

“Rather, shareholders are being asked to support the board’s original proposals for these items, in the knowledge that the board and executive board have voluntarily agreed to not accept the full amounts that they would be entitled to if the proposals are approved by shareholders,” ISS said in a report.

A bank spokesman said the bank took note of the recommendations and respects shareholder democracy.

The Glass Lewis opposition was reported by Swiss broadcaster SRF. Glass Lewis, which had opposed the 26 million francs in short-term bonuses, did not immediately respond to a request for comment.

If shareholders vote down the bonuses, Credit Suisse’s board of directors may submit a new proposal to an extraordinary general meeting or to the next AGM, according to Credit Suisse’s articles of association.

ISS and Glass Lewis represent 15-20 per cent and 10 per cent of Credit Suisse shareholders respectively, according to an estimate from Swiss shareholder advisory firm Ethos.

Over all, CEO Thiam’s compensation will drop by 4.67 million francs through the bonus cut, although his 2016 compensation will fall only to 10.24 million francs from 11.9 million because the bulk of the reduction comes from 2017 long-term payments.

The pay packet still makes Thiam one of Europe’s highest-paid bank CEOs.

Source: The Globe and Mail

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