Credit Suisse Raises CEO Pay After Missing ROE, Cost GoalJeffrey Vögeli and Elena Logutenkova
Credit Suisse Group AG, the second-biggest Swiss bank, raised Chief Executive Officer Brady Dougan’s pay by 26 percent for 2013, even as he missed financial targets set by the bank.
Dougan, 54, received total compensation of 9.79 million Swiss francs ($11 million), including a salary of 2.5 million francs, the Zurich-based company said today in its annual report. He earned 7.77 million francs the previous year.
Credit Suisse published a target bonus level for Dougan last year for the first time, as well as financial goals linked to the award. The bank missed goals for its return-on-equity and cost-to-income ratios, which are used to determine two-thirds of the CEO’s bonus. The board awarded Dougan 103 percent of his target for total compensation after judging that he outperformed by other measures.
“In particular, under Mr. Dougan’s leadership, the group strengthened its capital position,” Credit Suisse said. The board approved his pay “given the strong performance of Mr. Dougan during 2013 and his achievements in positioning the firm for the future,” the bank said.
Dougan’s raise comes as executive salaries in Switzerland face increasing scrutiny. Swiss voters approved a measure last year giving shareholders a binding say on pay. All publicly traded Swiss companies have to implement this so-called fat-cat initiative by 2015.
Two Credit Suisse executive board members are subject to bonus caps introduced in the U.K. at the beginning of the year. The bank will award them a fixed allowance during 2014 based on their roles and responsibilities, Credit Suisse said, declining to identify the executives. Gael de Boissard, the co-head of the investment bank, is based in London.
The U.K. Prudential Regulation Authority introduced a rule capping variable compensation at no more than fixed pay, though companies can win shareholder approval to increase bonuses to as much as twice fixed pay.
Dougan’s target bonus of 6.75 million francs last year was contingent on Credit Suisse reaching an underlying return on equity of 11 percent and a ratio of costs to income of 70 percent. It also included a qualitative assessment of capital strength, strategy execution and the management of risks and employees, the bank said in the annual report for 2012.
Compensation linked to financial objectives was on average 12 percent below target for the executive board. The board exceeded targets by 37 percent, on average, for compensation linked to the qualitative assessment, Credit Suisse said.
Credit Suisse reported an underlying return on equity of 10 percent for 2013, unchanged from the previous year, and an underlying cost-to-income ratio of 77 percent, down from 80 percent. Underlying figures exclude the impact on earnings from movement in credit spreads on the bank’s own liabilities, reorganization charges, some litigation provisions and gains and charges from unit sales.
The bank restated its fourth-quarter loss to 476 million francs after setting aside 468 million francs, primarily related to the U.S. probe into whether Credit Suisse helped Americans evade taxes.
Credit Suisse had previously restated results for the quarter last month, reporting a loss of 8 million francs after a 275 million-franc charge to settle lawsuits over mortgages sold to Fannie Mae and Freddie Mac.
Credit Suisse shares were little changed at 29.04 francs by 10:35 a.m. in Zurich. The stock rose 6.5 percent this year.
The total 2013 bonus pool, including pay deferred into future years, rose 5.6 percent to 3.61 billion francs from 3.42 billion francs for the previous year, Credit Suisse said in the annual report. The bank said in January it would grant about 20 percent of 2013 deferred pay for directors and managing directors in contingent-capital securities, which lose value if the firm’s common equity ratio falls below 7 percent.
UBS AG, Switzerland’s biggest bank, increased the 2013 total bonus pool by 28 percent to 3.2 billion francs as it reported annual net income of 3.17 billion francs, compared with a loss in 2012.
CEO Sergio Ermotti got a 21 percent increase in total compensation to 10.73 million francs, while the head of the investment bank, Andrea Orcel, was the highest-paid member of the executive board, earning 11.43 million francs, UBS said last month.
Deutsche Bank AG, Europe’s biggest investment bank by revenue, raised the total compensation, excluding benefits, for Anshu Jain and Juergen Fitschen by 53 percent to 7.47 million euros ($10.3 million) each for their first full year as co-chief executive officers.
Barclays Plc CEO Antony Jenkins was paid 1.6 million pounds ($2.68 million) for 2013. He waived his right to a bonus after regulatory penalties and lawsuits continued to impose costs on the bank.