Credit Suisse May Pay Less in Asset-Linked Bonuses Than in 2011

Credit Suisse Group AG, Switzerland’s second-largest bank, may award less in asset-linked bonds to employees for 2012 than it paid out under a similar compensation plan the previous year as part of bonuses.

“In the last four years we have on several occasions remunerated our employees partly in the form of risk positions within some of the investment bank’s portfolio,” Chief Financial Officer David Mathers, 47, told reporters on a conference call from Zurich today. “This year’s was smaller. It’s called the Plus Bond.”

Credit Suisse, which in 2008 awarded employees bonuses linked to a pool of toxic assets, last year granted about $800 million in structured notes linked to derivative counterparty risks, named Partner Asset Facility 2, to more than 5,500 senior employees throughout the bank. The bonds were designed to help cut risks and improve the lender’s capital position.

Plus Bond awards are based on a trading portfolio of structured product securities, have a maturity of 3 1/2 years, and will pay an annual coupon, according to a Credit Suisse internal memo last month. While the instrument will make up part of bonuses for the top investment bankers, other employees can elect to receive it as well instead of share awards.

“We think it’s appropriate, it’s aligned, it’s something discussed and agreed with the regulators as well,” Mathers said. “The third PAF is how I think about it,” he added, referring to the Partner Asset Facility.

Credit Suisse Chief Executive Officer Brady Dougan declined to comment on the developments of the bonus pool for 2012 before the lender’s annual report is published. The bank cut its 2011 bonus pool by 41 percent to about 3 billion francs, including pay that was deferred into future years.