A majority of shareholders approved the executive pay packages at Credit Suisse on Friday, amid backlash from some investors with the bank facing $1 billion worth of losses.
Shareholders approved all four of the Swiss bank's proposed pay packages and bonuses for top management in binding votes at its annual general meeting, Reuters reported. Nearly 85 percent of shareholders voted for a fixed-term pay for the executive board. In another vote, close to 82 percent voted for a proposed long-term bonus pay.
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Shareholders gathered Friday for the annual general meeting in Zurich to discuss the bank's strategy. Speaking at the meeting, CEO Tidjane Thiam warned investors of a tough year ahead and said the bank's share price development in recent months has been disappointing.
Thiam said that the performance of Credit Suisse's wealth management business in 2015 was good and remained strong during the first quarter of 2016, but volatile results from its investment bank have manifested itself in poor performance in the fourth quarter of 2015 and to a lesser extent in the first quarter of 2016.
The bank has come under fire from its shareholders in the wake of $1 billion worth of losses at the bank which date back from October and highlighted by Thiam in March. Thiam himself faces questions over his bonus package and to compound problems Credit Suisse's share price are down nearly 41 percent since Thiam took over in July last year.
"The responsibility is with the board and the president of the board," Hans Jacob Heitz, a lawyer and one of the shareholders, told CNBC in Zurich on Friday before the vote.
"We have to think about whether there should be a change. What we don't understand at all is that the previous CEO, Brady Dougan, is responsible for the situation we have today. They have rewarded him and paid him many bonuses and I am demanding he has to pay this back."
Another shareholder spoke to CNBC ahead of the meeting and said the board will make losses or destroy whatever has been built up by the previous management and then take money for that.
Thiam joined last year from Prudential, giving investors hope that he would look at the banking industry from a fresh perspective. However, confidence was shaken when he said it was only in February this year that he found out about the scale of the bank's risky credit trading positions. His bonus for his six months in the job last year was 2.86 million francs ($2.96 million), according to Reuters.
Robert McCormick, chief policy officer at advisory firm Glass Lewis – another Credit Suisse shareholder - warned against the lack of disclosure. In an interview with CNBC, McCormick said the problem is not just that payments were made when the company lost $1 billion but the audacity with which these decisions were made and who received these awards.
"If you look at the disclosure, it's quite limited. They have held themselves to a standard of global investment banks. Their disclosure is quite limited so you have these big amounts being paid, they have lost considerable amount of money, trailing peers and you really don't know how they got to these decisions."
He further explained that while the design of the awards looks good, the amounts seem "odd" given the performance of the bank in 2015.
At the meeting, Thiam asked for patience from investors and said the company is building a platform for the future. "That can seem like a tough task, and one that rarely wins many plaudits in the short term, but it is the only path that will lead to success in the long term," Thiam said.
McCormick told CNBC that Thiam just joined in July so there may be a benefit of doubt given this year. However, if things continue like this there maybe more reaction next year, he added.
"It is always difficult to guess which way shareholders are thinking. And of course the company may be engaging with the shareholders, convincing them that the strategy going forward to restructure the bank and increase their capital base etc. just needs more time and it is certainly a tall-task so they may be a bit more inclined to pay up at this point for future results," he said.
Credit Suisse joins the list of ailing banks paying large sums of money to their executives, a trend that has been heavily criticized lately.