Credit Suisse cut the bonuses it gives to its top management by 40% after being criticized by shareholders of the bank’s plans to make a payout of 78 million Swiss francs or $78 million despite heavy losses.
The move by the second largest bank in Switzerland is rare and is representative of a victory for shareholders who are pushing more and more for modest pay within an industry where there has been a drop in profits but pay has tended to remain high.
On Thursday, in a statement, the bank announced it took the decision after expressed reservations were made by shareholders about its planned bonuses payout, reversing the defense it made over bonuses earlier the same day.
The move by Credit Suisse came amidst growing protest from the public. Earlier in the week, one lawmaker, who helped start a veto by shareholders over excessive pay for management in Switzerland, Thomas Minder, urged investors to use the power to block high bonuses for top executives at Credit Suisse.
Minder’s comments increased the pressure applied to the bank making it rethink its plans after many advisory groups had told shareholders they should oppose that part or all of the bonus payments when they take their votes later this month.
Tidjane Thiam the CEO at Credit Suisse was set to be given close to 12 million francs for pay and bonuses, an amount that would have made the CEO one of the highest paid bankers in Europe despite last year the bank suffering a loss in the multibillions of dollars.
Had the plan been rejected by shareholders when they voted on it April 28, it would have been the first time the Swiss veto was used at a leading business and a huge setback for the bank.
Institutional Shareholder Services had told bank shareholders to oppose either all or part of the payouts the bank was planning to make to its top executives.
ISS, which is an advisor for over 1,700 of the largest investors in the world, is very influential and the recommendations it makes are widely followed by shareholders when they make their votes.
The high pay strained the patience of investors at Credit Suisse during a time when there is consideration by the bank of asking investors for money as a way to shore up bank finances that had been hit due to a settlement of $5.3 billion for the sales of toxic debt.
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