Credit Suisse Investors Urged to Reject Executive Pay Plan

(Bloomberg) -- Credit Suisse Group AG shareholders should reject the bank’s compensation plan over proposed payments to former executives after a corporate spying scandal, a top shareholder adviser said.

Investors should be concerned about the lack of disclosure of overall compensation for former Chief Operating Officer Pierre-Olivier Bouee, who was blamed for the spying and fired in December, Glass Lewis said in a report seen by Bloomberg. It also questioned the board’s decision to allocate full “good leaver” remuneration to former Chief Executive Officer Tidjane Thiam, even though he was also pushed out.

“We have some lingering concerns about the board’s reliability in maintaining a transparent and consistent approach to compensation in delicate circumstances like the ones the company has recently faced,” Glass Lewis said.

The bank ousted Thiam in February in an attempt to repair its reputation, turning to 20-year Credit Suisse veteran Thomas Gottstein. An internal probe concluded that Thiam didn’t know about the spying, which targeted former wealth management executive Iqbal Khan, and that Bouee was responsible. Human resources chief Peter Goerke was also followed, which the bank also blamed on Bouee.

Legal Liability

Glass Lewis also recommends that shareholders reject an annual request to release directors and executives from liability at the April 30 annual general meeting, due to Bouee’s termination for cause. A rejection would mean shareholders reserve the right to take legal action against management. Institutional Shareholder Services, another adviser, recommended investors approve discharge and the compensation plan, though cautioned that the bank is still subject to a probe by the Swiss regulator.

“We take note of the recommendations put forward,” a spokesman for the bank said. “Credit Suisse respects shareholder democracy.”

The adviser last month also recommended that Julius Baer Group Ltd. investors should reject the release of liability after a report by the Swiss regulator raised concerns about the bank’s Latin America operations.

Last month, Credit Suisse said Thiam’s pay for 2019 was cut by about 15% to 10.7 million Swiss francs ($11.1 million).

“Mr. Thiam has taken accountability for the events and accepted a reduction of his non-financial assessment score,” board member Kai Nargolwala wrote in the bank’s compensation report.

Glass Lewis said Gottstein’s base salary will be 10% lower than Thiam’s, indicating a “positive direction” in executive pay.

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