Dougan's Pay Sliced by 34% After Credit Suisse Posted Drop in 2010 Profit
Credit Suisse AG CEO Brady Dougan
Gianluca Colla/Bloomberg
Brady Dougan, chief executive officer of Credit Suisse AG.
Brady Dougan, chief executive officer of Credit Suisse AG. Photographer: Gianluca Colla/Bloomberg
Feb. 10 (Bloomberg) -- Brady Dougan, chief executive officer of Credit Suisse Group AG, talks with Bloomberg's David Tweed about the impact of stricter capital rules on profitability. Switzerland's second-largest bank reported fourth-quarter earnings that missed analysts’ estimates and reduced its targets for return on equity from more than 18 percent to more than 15 percent. (Source: Bloomberg)
Credit Suisse Group AG (CSGN), Switzerland’s second-biggest bank, cut total compensation for Chief Executive Officer Brady Dougan 34 percent for 2010 after profit declined.
Dougan’s pay of 12.8 million Swiss francs ($14 million) included a fixed salary of 2.5 million francs, which doubled from 2009, and 10.26 million francs in bonus and other compensation, the Zurich-based bank said in its annual report published today. He was paid 19.2 million francs in 2009.
Credit Suisse cut the total 2010 bonus pool by 27 percent to about 5.05 billion francs, as net income fell 24 percent to 5.1 billion francs. The decline in earnings was a result of lower client activity in the second half of the year.
UBS AG, Switzerland’s biggest bank, said earlier this month that Chief Executive Officer Oswald Gruebel decided to forgo his bonus for 2010 because the company’s shares didn’t rise in the period. UBS cut compensation for the highest-paid member of the executive board, investment bank head Carsten Kengeter, by 29 percent to 9.32 million francs.
The top-paid member on Credit Suisse’s executive board was Antonio Quintella with total compensation of 15.63 million francs. The former CEO of the bank’s Brazil business was promoted to head the Americas region in July.
Deferred Pay
The 16-member Credit Suisse executive board received total pay of 160.34 million francs, up from the 148.9 million francs given to 13 individuals in 2009. Board members except for Paul Calello, who passed away last year, didn’t receive any cash bonuses and on average got 24 percent lower variable compensation that was fully deferred into future years, it said.
Managers who received bonuses as part of the so-called performance incentive plan II, or PIP II program for 2005, will probably not receive any payout when the awards settle in May because Credit Suisse’s share price will probably be below the 47 franc target, the bank said today. Credit Suisse last April paid out more than 3 billion francs of shares, including stock worth about 71 million francs to Dougan, from the previous PIP I awards plan.
The board of directors, headed by Chairman Hans-Ulrich Doerig, received total pay of 19.96 million francs, Credit Suisse said. The bank proposed to shareholders the re-election of Peter Brabeck-Letmathe, Jean Lanier and Anton van Rossum to the board at the annual meeting next month.
CoCo Bonds
Credit Suisse also asked for shareholders’ approval to increase the amount of shares it can issue to 500 million from 100 million previously. The increase would allow the bank to sell contingent convertible bonds, which turn into equity when the bank’s capital drops below a certain level, to fulfill regulatory proposals.
The bank last month cut its return on equity target to more than 15 percent from more than 18 percent in response to stricter regulation. The bank has already sold $2 billion in contingent convertible bonds and agreed to exchange about $6.2 billion of existing hybrid debt held by shareholders in Qatar and Saudi Arabia for CoCo notes after October 2013.
Credit Suisse is “well positioned to succeed in the changing operating environment,” Dougan and Doerig said in the message to shareholders today.
To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net
To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net
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