Following the decision of Credit Suisse's CEO and executive board to take a 40% cut to their variable compensation, the bank has made changes to its 2016 compensation levels.
In what is being seen as a corporate governance victory, the move was made to address shareholder concerns about the size of pay packets at the Swiss private bank despite mounting losses, following the release of the 2016 compensation report on March 24.
In 2016, Credit Suisse reported a net loss attributable to shareholders of CHF 2,438 million and a pre-tax loss of CHF 1,966 million.
As a result of the decision, the compensation for CEO Tidjane Thiam, as the highest paid executive, will be reduced by CHF 4.67 million ($4.68 million).
Of the total reduction, a CHF 1.67 million decrease for the short-term incentive (STI) award will be reflected in his 2016 compensation and a CHF 3 million decrease for the long-term incentive (LTI) opportunity will be reflected in his 2017 compensation.
The reduced STI amount for Thiam will therefore be CHF 2.5 million and his total compensation for 2016 will amount to CHF 10.24 million.
The board has also decided not to increase its salaries for 2017.
In a letter to shareholders, Thiam said: 'You may recall that for my compensation award related to 2015 I voluntarily asked the compensation committee to reduce
the bonus they had granted me by 40%.
'For 2016, I have decided to propose again to the compensation committee and the board of directors that the total variable compensation granted to me by the compensation committee and the board of directors be reduced by 40%.'
The proposed pay cuts will be submitted to the annual general meeting of shareholders on April 28.
Executive board pay
The chairman of the compensation committee, Jean Lanier, also laid out changes to the total salary of the rest of the executive board.
The STI compensation for 2016, proposed in the AGM agenda to be CHF 25.99 million, will be reduced to CHF 17.01 million.
Meanwhile, the LTI compensation for 2017 will be reduced from CHF 52 million to CHF 31.2 million.
Thus, overall, the executive board compensation will fall by CHF 29.78 million, out of which, the STI reduction will be reflected in the 2016 compensation and the rest in the 2017 pay.
Total executive board compensation for Credit Suisse will amount to CHF 73.06 million for 2016.
In addition, the maximum board of directors pay for 2017 has also been capped at CHF 12 million.