The board and executive management team at Credit Suisse picked a bad time to put in place a potential 70 million Swiss franc ($113 million) bonus pool for the successful “transformation” of a bank that was this week rescued by the Swiss National Bank.
The bonus pool was an awful idea before Credit Suisse decided to borrow 50 billion Swiss francs from the central bank to restore confidence in its liquidity ratios. Now, the bonus pool is a laughable symbol of the supreme arrogance of an institution that brought disaster upon itself.
Bonus pool = Deadpool 3 wannabe Credit Suisse ?
If Credit Suisse chairman Axel Lehmann and the chief executive Ulrich Koerner are foolish enough to push this bonus pool proposal through at the bank’s annual meeting in April, we will know something is rotten in Zurich.
Under the proposed “transformation award”, the bank’s executive board, including Koerner, Francesco De Ferrari, who is CEO of wealth management, Andre Helfenstein, the CEO of Swiss Bank, Edwin Low, CEO of Asia Pacific, and seven other executives will be entitled to awards that vest over three years.
The bank says the purpose of this award “is to maximise motivation, retention and accountability for the executive board over the next three years with stretch performance conditions to ensure pay for performance alignment”.
In a historic act of misjudgment, shareholders are being asked to approve the aggregate amount of 30 million Swiss francs and a maximum award value at grant of 70 million Swiss francs if all performance conditions are met.
Chanticleer believes this is not the time to be putting in place a bonus package for a group of executives who just need to keep doing their day jobs. By the way, they get paid handsomely for that. Koerner’s predecessor was paid 8.5 million Swiss francs.
If the bank does not remove this resolution from the notice of meeting voluntarily, the Swiss central bank should force it to.
But Chanticleer does not have immense confidence that the Swiss central bank or the country’s banking regulator, the Swiss Financial Market Supervisory Authority, will be on the case.
Shooting itself in the foot
After all, it was not the Swiss central bank or FINMA who last week highlighted weaknesses in Credit Suisse’s control functions regarding revisions to the consolidated cash flow statements in the years ended December 31, 2020, and 2019. This warning was issued by the US Securities Exchange Commission.
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