Credit Suisse signals higher pay for Thiam after bonus drought

[ZURICH] 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. He's having to practice what he preaches.

The Swiss lender's chief executive officer saw his pay fall for last year after shareholder uproar against his proposed remuneration. Mr Thiam received 9.7 million Swiss francs (S$13.45 million) for 2017, including long-term awards from previous years, according to the bank's compensation report published on Friday. That's 5 per cent less than a year earlier.

The bank said that Mr Thiam's compensation would "return to levels in line with the expected improvement" in the bank's performance.

Credit Suisse posted a third consecutive loss in 2017, driven by a writedown of tax assets in the US, with the firm's struggles keeping executive pay in the spotlight. Mr Thiam asked shareholders to stick with the bank, promising higher capital returns from next year.

The bank's executive board waived 40 per cent 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, Mr Thiam's pay is struggling to make the same amount as at his previous job as CEO at Prudential Plc, where he earned £11.8 million (S$21.92 million) in 2014. And he lags behind local rival Sergio Ermotti at UBS Group AG, who received 14.2 million francs last year.

Still, Mr 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.

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

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

The overall compensation pool for the executive board fell 4.3 per cent to 69.9 million francs, reflecting the cut in long-term incentives from last year, according to the report.

Bonuses climbed 50 per cent 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 three per cent to 3.2 billion francs.

BLOOMBERG