Ethos will make a statement at today’s annual general meeting of Credit Suisse. The remuneration seems too high in light of the CHF 3 billion loss recorded in 2015. In addition, in light of the ongoing litigation, Ethos recommends that shareholders oppose the discharge of the board members. Finally, given the level of core capital, which remains insufficient and given the significant uncertainty on financial markets, Ethos recommends that shareholders renounce to their dividend this year.
Excessive remuneration
Ethos recommends to vote against all proposals tied to the remuneration of the members of the executive committee and of the board. Ethos is of the opinion that the executive committee should not have received variable remuneration in 2015 given the CHF 3 billion loss recorded in the year under review. In addition, the replacement payment granted to the new CEO, Tidjane Thiam, of CHF 14 Million, can not be accepted. Finally, it is difficult to comprehend why the remuneration for the members of the board (excepting the chairman) rose on average by 33%.
Discharge would be premature
In 2015 Credit Suisse booked new provisions for litigation of CHF 1.2 billion for numerous ongoing cases. New cases have already hit the bank in early 2016. The total provisions over the last 4 years are close to CHF 7 billion. In addition, Credit Suisse made a write down of CHF 3.8 billion on goodwill tied to the investment bank. Ethos considers that it would be premature to grant the discharge to the governing bodies of Credit Suisse.
Insufficient capital to pay a dividend
The board proposes to pay a dividend of CHF 0.70 per share (in cash and/or shares), amounting to CHF 1.3 billion. The new too big to fail (TBTF) regulation will raise the minimum capital requirements. Despite the capital increase of CHF 6 billion accepted by shareholders in November 2015, Credit Suisse’s capital ratio remains low, with a tier 1 capital at 3.3% of the total balance sheet (minimum 3.5% in 2019 under TBTF regulation). The dividend would further lower this ratio.
