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Credit Suisse's Pay Revamp Gets Blessing From Investor Groups

Credit Suisse's Pay Revamp Gets Blessing From Proxy Advisers

(Bloomberg) -- As investors turn more positive on Credit Suisse Group AG’s turnaround plan, they’re also lifting the siege on the board over the bank’s compensation policy.

Shareholder groups ISS and Glass Lewis -- which make recommendations to shareholders on how to vote at the annual shareholder meetings of companies -- said investors should vote in favor of the Swiss bank’s remuneration proposals, approving both short-term and long-term incentive plans for executives and last year’s compensation for the board of directors.

The bank’s management board is getting 69.9 million francs ($73.1 million) for 2017, 4.3 percent less than 2016. Chief Executive Officer Tidjane Thiam is taking a slightly bigger pay cut of 5 percent. His total remuneration package for 2017 equals 9.7 million francs, including long-term awards from previous years.

By contrast, the bank’s overall 2017 bonus pool is 3 percent higher than 2016.

“While net results were for the third consecutive year negatively impacted by a one-time event, namely a CHF 2.3 billion write down of deferred tax assets which resulted in an overall net loss for the group, underlying results developed positively during the year,” ISS wrote in a report. “Bonus outcomes appear to be broadly reflective of this and on this basis, and given the lack of any additional concerns, merit support.”

Credit Suisse’s remuneration plan for 2016 had caused uproar among shareholders last year. Investors saw it as excessive against the background of an expensive restructuring and an annual loss caused by legal costs in the U.S. The executive board appeased their anger by waiving 40 percent of its short-term and long-term bonuses.

The bank overhauled its compensation policy in reaction to the furore and Chairman Urs Rohner admitted underestimating public sensitivity to the issue. The bank dropped metrics relating to the bank’s capital ratios from the formula for calculating short-term bonuses, and increasing the importance of cost reductions. It also introduced new components for the long-term incentive component of pay awards, including return on tangible equity.

To contact the reporter on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net.

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Geoffrey Smith, Darshini Shah

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