Credit Suisse CEO Thiam gets 30% pay hike after turnaround ends

Credit Suisse Group boosted chief executive officer Tidjane Thiam’s compensation by about 30 per cent for delivering the first annual profit in four years, even as the bank’s trading losses continue to overshadow progress in other areas.

Thiam’s pay for 2018 rose to 12.7 million Swiss francs (S$17.3 million), according to the bank’s compensation report. A large part of the increase was to compensate Thiam for a 2017 pay cut that aimed to calm shareholder objections to generous compensation packages amid three years of losses.

Without last year’s pay cut, the increase for 2018 would have been 13 per cent, Switzerland’s second-largest bank said. While the overall bonus pool was unchanged from last year at 3.2 billion francs, many top performers received bigger awards, the lender said.

Last year was a challenging one for Credit Suisse and other banks in Switzerland and Europe. Its share price fell 38% in 2018, more than many of its European peers also posting sharp drops. At the same time, the bank completed a three-year restructuring program that geared its business toward wealth management while continuing to wind down troubled assets through its strategic resolution unit.

Credit Suisse posted a full-year profit last year after three consecutive annual losses driven by restructuring costs, a multibillion-dollar settlement with U.S. authorities over crisis-era mortgage-backed securities and, in 2017, one-time accounting charges related to U.S. corporate tax reform.

“Differentiation has been made such that high-performing employees received year-on-year increases in variable incentive compensation,” said Kai Nargolwala, who heads the board compensation committee.

The global-markets business posted a larger-than-expected loss of 193 million francs in the fourth quarter, offsetting wealth-management and investment-banking results that beat estimates. Thiam, a former insurance executive, is under pressure to boost performance of the unit that trades bonds, stocks and derivatives.

The 12 members of the executive board together were awarded 93.5 million francs between fixed pay and short- and long-term incentives, which vest over the course of several years and are contingent upon hitting a number of targets.

Thiam’s pay counts amongst the highest reported for a bank chief so far this year, although it was topped by cross-town rival UBS CEO Sergio Ermotti’s14.1 million franc award.

The issue of management pay has once again risen to the fore in Switzerland, where a ‘Fat Cat’ referendum allowing shareholders to vote on board- and executive-level compensation have done little to slow its overall growth.

In 2016, executives at Credit Suisse agreed to cut their bonuses by 40 percent, after the bank’s proposals for stepped up payouts came under fire.

The cuts, which affected 2016 cash bonuses and 2017 share incentives, had brought down Thiam’s pay to 9.7 million francs last year. Without the previous pay cut, Thiam’s compensation boost would have been 13 percent this year.

Despite wrapping up its overhaul, the bank’s share price remains under pressure, which it said meant executives would only get a fraction of the share packages they were awarded in 2016.

Amongst the major British banks, top CEO pay went to Lloyds boss Antonio Horto-Osorio, who received 6.3 million pounds ($8.28 million). Santander’s British boss received 6.4 million pounds.