Credit Suisse Signals Higher Thiam Pay After Bonus Drought

(Bloomberg) -- Credit Suisse Group AG’s Tidjane Thiam has asked investors for patience as he navigates the firm through the final year of a major restructuring. And the chief executive officer is having to practice what he preaches when it comes to his own pay.

Thiam’s 2017 remuneration fell, the Swiss lender’s compensation report shows, after his pay package had caused uproar among shareholders. But at the same time, the report published Friday hinted that his pay could rise again soon, and “return to levels in line with the expected improvement” in the bank’s performance.

Thiam received 9.7 million Swiss francs ($10.2 million) for 2017, including long-term awards from previous years. That’s 5 percent less than a year earlier and comes after Credit Suisse posted a third consecutive loss, driven by a writedown of tax assets in the U.S. In November, Thiam asked investors to stick with the bank in the last phase of its restructuring, and promised to boost returns from next year.

The bank’s restructuring is keeping pay in the spotlight. Its executive board waived 40 percent of its short-term and long-term bonuses to quell criticism from shareholders last year. Swiss laws introduced in 2015 require companies listed in the country to give shareholders a binding vote on board and executive pay.

At Credit Suisse, Thiam is struggling to make the same amount as at his previous job as CEO at Prudential Plc, where he earned 11.8 million pounds ($16.6 million) in 2014. And he lags behind local rival Sergio Ermotti at UBS Group AG, who received 14.2 million francs last year.

Still, Thiam is earning more than many of his European peers.

ING Groep NV abandoned a plan to boost CEO Ralph Hamers’s pay after fierce criticism from Dutch leaders including Prime Minister Mark Rutte and Finance Minister Wopke Hoekstra.

Deutsche Bank CEO John Cryan, who is also leading his bank through a restructuring, earned 3.4 million euros in total compensation last year. The bank’s management board will waive its bonuses for a third year running, meaning the CEO of Europe’s biggest investment bank hasn’t seen a penny of variable compensation since he took the job in mid-2015.

Credit Suisse announced on Friday that it had sounded out investors and implemented changes to its compensation policy. The bank dropped capital metrics for its short-term incentives and increased the importance of the bank’s cost targets as an incentive. It introduced new components for the long-term incentives including return on tangible equity.
The bank also increased the shareholding requirement for executives to tie the performance of the stock more closely to the compensation.

Thiam’s Performance

Thiam’s proposed pay reflects “his strong performance” against several measures, “while also recognizing that the group is still in a transition phase,” the chairman of the compensation committee, Kai S. Nargolwala, said in the report.

Credit Suisse’s chairman Urs Rohner receives a total package of 4.3 million francs. Rohner waived 30 percent of his chair fee, or 450,000 francs, after 50 percent last year. Last month the Swiss Association of Bank Employees said the bank’s top leadership should scrap their bonuses for 2017 and invest the money in staff development instead.

Nargolwala said in his first letter to shareholders that he had met with 26 investors covering 40 percent of the shareholder base to discuss the compensation framework after the investor mutiny.

The overall compensation pool for the executive board fell 4.3 percent to 69.9 million francs, reflecting the cut in long-term incentives from last year, according to the report. Bonuses climbed 50 percent and are awarded based on metrics like the bank’s CET1 ratio and adjusted pretax profits. The bonus pool for the bank as a whole rose 3 percent to 3.2 billion francs.

To contact the reporters on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net, Patrick Winters in Zurich at pwinters3@bloomberg.net.

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Paul Armstrong, Christian Baumgaertel

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