Credit Suisse: Adviser recommends to reject "heavy" executive bonuses

7 years ago - Published in Finance, Fundamental Analysis

Proxy adviser Glass Lewis on Tuesday recommended Credit Suisse shareholders reject its proposal to pay 25.99 million Swiss francs ($25.9 million) in short-term bonuses to the executive board in a binding vote at the April 28 annual general meeting.

The amount appears “wholly inappropriate given the loss suffered by shareholders in the last two fiscal years,” the San Francisco-based proxy adviser said in its recommendations for the bank’s annual meeting on April 28. Proposed compensation for the board of directors is “excessive,” as Bloomberg reported.

Glass Lewis also recommended investors reject the bank’s proposal to reelect Andreas Koopmann, Iris Bohnet and Kaikhushru Nargolwala to its supervisory board. The three also sit on the compensation committee, which the group said had not done enough to address investor concerns about executive pay.

"We take note of the recommendations put forward," a spokeswoman for Credit Suisse, Switzerland's second-biggest bank, said in an emailed statement. "Credit Suisse respects shareholder democracy." Influential proxy adviser ISS has yet to issue its recommendations.

Bonus pool for CEO Tidjane Thiam should amount to 4.17 million francs, part of his award of 11.9 million francs, proportionately more than the 4.57 million francs he got for his first six months at Credit Suisse in 2015.

Credit Suisse posted a near-3 billion franc loss in 2016 amid the restructuring and penalties for the sale of toxic mortgage debt in the run-up to the financial crisis. Credit Suisse’s stock fell 33% in 2016, with market turmoil, surprise trading losses and legal cases sapping confidence in a costly turnaround plan. Under Chief Executive Officer Tidjane Thiam, the bank has reorganized operations and scaled back investment banking to free up capital for wealth management. Credit Suisse cut about 7,200 jobs last year and plans to eliminate thousands more this year.

Last week, the swiss bank confirmed to be the subject of tax investigations, after a tip-off to Dutch prosecutors about tens of thousands of suspect accounts triggered raids in five countries.