23 Mar 2013

Credit Suisse CEO pay rise to fuel bonus debate

9:21 am on 23 March 2013

Credit Suisse raised the pay of its chief executive by a third in 2012 - a move likely to stoke public and political anger over banker pay after a year in which the Swiss group's profits fell and its shares stalled.

Brady Dougan, leading a drive to reduce risky assets, improve capital levels and cut costs, received 7.8 million Swiss francs ($US8.2 million) last year, the bank said in its annual report published on Friday.

Anger at pay levels has already driven Swiss voters to back some of the world's strictest controls on executive pay, forcing public companies to give shareholders a binding vote on compensation.

European officials, emboldened by a victory to cap banker bonuses, are expected to follow suit.

Credit Suisse's local banking rival UBS, which was bailed out by the Swiss government nearly five years ago, was criticised last week after disclosing a near $9 million 2012 payout for chief executive Sergio Ermotti and a $26 million welcome package for its new investment bank chief.

Credit Suisse said on Friday that chairman Urs Rohner's pay also rose by one third to 5.2 million francs, while its top earner for the second year running was Robert Shafir, who was promoted to co-head of the newly merged private bank and asset management unit in November.

Mr Shafir's overall pay was 10.6 million francs, up from 8.5 million in 2011. He is also head of the Americas for Credit Suisse.

The bank's pay committee said the rewards were justified for the progress made in restructuring the business.

However Brigitta Moser-Harder, a retail shareholder of UBS and Credit Suisse who successfully campaigned for the Swiss pay curbs, condemned the rewards for Mr Dougan, Mr Shafir and Mr Rohner amid a drop in Credit Suisse's profits.

"The questionable argumentation that the three did their jobs very well shows once again that it's not effective performance that is measured," she told Reuters.

Credit Suisse's net profit fell 24% percent to 1.48 billion Swiss francs last year and the bank kept its mostly stock dividend unchanged.

Banks are generally taking a harder line on executive pay.

Deutsche Bank docked the pay of co-chief executives Anshu Jain and Juergen Fitschen after it was forced to restate earnings due to additional, unexpected legal provisions. Jain and Fitschen earned €4.8 million ($US6.2 million) each in 2012.

US rival JPMorgan Chase halved the bonus of chief executive Jamie Dimon after the bank suffered huge trading losses. His overall pay was $11.5 million last year.

Credit Suisse has also pledged to cap the bonus pool for its nine-person top management team at 2.5% of underlying net profit. Top management earned 74.1 million as a group in 2012, or roughly 2.1% of the profits.