Credit Suisse Group AG investors should reject the bank’s compensation report after an “unjustified” 30% boost to chief executive officer Tidjane Thiam’s pay, shareholder adviser Glass Lewis said.
The firm questioned both the way the pay rise was made public as well as the rationale behind it. Thiam, who delivered Credit Suisse’s first annual profit in four years, saw his 2018 compensation rise to 12.7mn Swiss francs ($12.7mn), largely to make up for earlier reductions to his long-term bonuses in response to shareholder discontent.
“This resolution appears of a particularly sensitive nature at this time, following the past expressions of criticism on the board’s poor exercise of discretion,” Glass Lewis said in a report. “Shareholders should reasonably expect cautious behaviours by the compensation committee, in an effort to rebuild investors’ trust.”
Previous conflicts between the bank and its shareholders over executive pay had subsided after the executive board took a voluntary pay cut last year. Without that cut, Thiam’s pay increase for 2018 would have been 13%, Credit Suisse said last month.
Credit Suisse posted three consecutive annual losses before returning to profit last year following a sweeping restructuring program led by Thiam. The executive pivoted the bank to wealth management, cut costs and raised more than 10bn francs in fresh equity to fund the restructuring.
While acknowledging the net profit posted in 2018, Glass Lewis said some key indicators “performed below the median of country and industry peers.” On top of that, the shares declined during the period and Thiam’s base salary “is already significantly above peers,” it said.