ZURICH, SWITZERLAND – Brady Dougan isn’t the person who sets his pay, as chief executive officer and not chairman of the board of Credit Suisse. But his 34 percent increased compensation in 2012 is likely to set tongues wagging in Switzerland, following a vote three weeks ago in favour of curbing executive pay.
The bank’s annual report for 2012, including the financial report, was published Friday 22 March, three days after an interview with Bloomberg where Dougan said that it’s unsustainable to have bankers’ earnings outstripping those of investors, and that the bank’s business model is being transformed: “We want to get back to a point where we can pay people competitively but also reward our shareholders proportionally to that, so it’s actually a reasonable split of the economic benefits that the firm produces.”
Dougan was paid CHF7.77 million in 2012, of which CHF2.5m was his salary, but he wasn’t the highest paid employee. Robert Shafir, who heads private banking and wealth management, was paid nearly CHF3 million more.
UBS paid its CEO, Sergio Ermotti, CHF8.87m in 2012.
A Credit Suisse re-balancing between executive compensation and shareholders’ earnings may be underway, but it hasn’t yet arrived, with the bank recommending a dividend of 75 centimes a share, stable compared to 2011. The bank says shareholders were asked to provide input last year on how the dividends should be paid and on what the compensation package mix should be.
The Minder Initiative that passed 3 March will give shareholders a far greater say in what were previously board decisions about compensation and terms in office.
Litigation brings down net income for 2012
Credit Suisse Friday reported pre-tax income for 2012 of CHF5.0 billion, up from CHF2.7b a year earlier, with net income nearly doubling to CHF3.6b, up from CHF1.8b. However, when litigation (including an old lawsuit over shareholder losses on bonds) and accounting charges are taken into account, net income fell to CHF1.35b for the year.