Lawmaker behind Swiss pay
veto calls for Credit Suisse bonus cut
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[April 13, 2017]
By Joshua Franklin
ZURICH
(Reuters) - The lawmaker who instigated a shareholder veto over
excessive management pay in Switzerland has urged investors to use this
power to block 78 million Swiss francs ($78 million) in bonuses for
Credit Suisse's <CSGN.S> top executives.
The comments from Thomas Minder add to pressure on Switzerland's
second-biggest bank to rethink the bonuses after several advisory groups
told shareholders to oppose part or all of the payments when they vote
this month.
"If corporate governance is correct and the company has worked well and
has a good annual result, then yes, some of (the profits) should be
distributed," Minder said in a telephone interview.
"But if it worked badly, like Credit Suisse, then, dear me, nothing can
be allowed to be paid out."
Chief Executive Tidjane Thiam is set to receive almost 12 million
francs, making him one of Europe's highest-paid bankers despite a
multibillion-dollar loss last year.
If shareholders reject the plan, it would be the first use of the Swiss
veto at a leading company.
Minder, an independent member of the Swiss parliament, led a 2013
referendum that resulted in the implementation of binding shareholder
votes on executive pay in the wake of massive bonuses at UBS <UBSG.S>
that preceded a government bailout.
Four years on, Minder said Credit Suisse's proposal for hefty payouts to
Thiam and his fellow senior managers smack of the same disconnect
between performance and pay that spawned his referendum.
"If there's no money in the coffers then there are no bonuses for top
management or employees," he said. "That is a mortal sin."
ON TARGET
A Credit Suisse spokeswoman said the bonuses were based on performance
targets agreed by shareholders. She also pointed to management's
cost-cutting efforts and the strong performance of its core private
banking business.
Nevertheless, Credit Suisse faces growing opposition to the proposed
bonuses, with investor advisers Institutional Shareholder Services (ISS),
Ethos and Glass Lewis opposing part or all of the payments.
ISS also recommended investors vote against the compensation recommended
for Credit Suisse's board of directors, led by Chairman Urs Rohner, whom
Ethos said should be replaced.
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Swiss People's Party (SVP) Councillor of State Thomas Minder speaks
to delegates during their party meeting in Balsthal January 26,
2013. REUTERS/Ruben Sprich/File Photo
ISS,
which advises more than 1,700 of the world's biggest investors, is highly
influential and its recommendations are widely followed when shareholders cast
their votes.
The vote will take place at Credit Suisse's annual meeting in Zurich on April 28
with the support of a majority of shareholders sufficient for the pay packages
to pass, the bank said.
The
opposition risks straining investor patience with Credit Suisse at a time when
the bank is considering asking them for money to shore up finances that were hit
by a $5.3 billion settlement for selling toxic debt.
If shareholders vote down the bonuses, the board of directors can submit a new
proposal, according to Credit Suisse's articles of association.
Credit Suisse has locked up some key support. Harris Associates, one of its
biggest shareholders with a 4.96 percent stake, according to Thomson Reuters
data, plans to vote in favor of all the AGM proposals, Swiss newspaper NZZ am
Sonntag has reported.
The bank has argued that cutting compensation now would punish current
management for mistakes made by their predecessors.
Since taking over as CEO in mid-2015, Thiam has shifted the bank's focus towards
wealth management while shrinking Credit Suisse's investment bank.
The costly restructuring and the heavy penalties for selling toxic mortgage debt
in the run-up to the financial crisis meant the bank posted a 2.7 billion franc
loss for 2016, its second straight year in the red.
($1 = 1.0016 Swiss francs)
(Additional reporting by Oliver Hirt; editing by John O'Donnell/Keith Weir)
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