Credit Suisse Shrinks Executive Bonuses as Investors Develop a Low Tolerance for Losses

CEO Tidjane Thiam joins AIG's Peter Hancock and BP's Bob Dudley in having his bonus cut.

Credit Suisse has become the next big loss-making company to slash executive bonuses following claims from some shareholders that they were excessive, despite management meeting internal targets.

Executive board members, including CEO Tidjane Thiam, will have their long-term incentive awards for 2017 and short-term awards for 2016 both cut by 40%, the Swiss investment bank said this morning.

Total board compensation in 2017 will stay at the level of 2015 and 2016.

Credit Suisse has posted two straight years of losses, though its remuneration committee decided its executives had delivered well against their targets for 2016.

“I HOPE THAT THIS DECISION WILL ALLEVIATE SOME OF THE CONCERNS EXPRESSED BY SOME SHAREHOLDERS AND WILL ALLOW THE EXECUTIVE TEAM TO CONTINUE TO FOCUS ON THE TASK AT HAND.”

Some shareholders were concerned a write down on the value of a previous acquisition and losses associated with investments in toxic mortgage-backed securities during the financial crisis weren’t accurately reflected in the compensation of current management, the company said.

“My highest priority is to see through the turnaround of Credit Suisse, which is under way,” Thiam wrote in his annual letter to shareholders. “I hope that this decision will alleviate some of the concerns expressed by some shareholders and will allow the executive team to continue to focus on the task at hand.”

Separately, AIG said yesterday that its board had declined to award outgoing CEO Peter Hancock a bonus after the U.S. insurer racked up a deeper-than-expected quarterly loss. Hancock’s total remuneration for 2016 fell 23% as a result.

And about a week ago, BP cut CEO Bob Dudley’s total 2016 remuneration package by 40%, as persistently low oil prices and expenses associated with a disastrous oil spill kept the company in the red.

As previously reported by Chief Executive, turnaround CEOs like Dudley, Hancock and Thiam can face a tougher a task than boom-time managers. Investor tolerance for financial losses, however, is weak amid a wider societal backlash against the establishment.

Credit Suisse investors haven’t had much cause to celebrate: its shares have never recovered since the financial crisis and are substantially lower than they were when Thiam took the reins in June, 2015.

“Our decision reflects the total confidence we have in the progress we are making,” Thiam wrote. “Although that progress is not yet reflected in our share price, I am confident that our strategy and our disciplined execution will in due course create value for you, our shareholders.”


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.