Ethos CEO Vincent Kaufmann is delivering a statement at the Credit Suisse annual general meeting today recommending that shareholders vote against the board’s proposals regarding board and executive remuneration and against the re-election of the chairman of the board. Ethos also asks that the board re-inforces its corporate social responsibility.
The new strategy initiated by Credit Suisse in 2015 seems to be bearing fruit. Unfortunately, the reduction in investment banking activities and the renewed focus on wealth management came very late, requiring two capital increases totalling over CHF 11 billion in less than three years. Ethos is of the opinion that the change in course also requires a change in the board’s chairmanship, as the current chairman has defended for years a strategy focused on investment banking very intensive in risky assets which led the bank to the brink.
The remuneration system is still unsatisfactory
The strong signal given by shareholders at the 2017 annual general meeting regarding board and executive remuneration led to several improvements in terms of transparency and the structure of the remuneration. Nonetheless, the total remuneration proposed for the 12 members of the executive management amounts to almost CHF 115 million, of which CHF 84 million is variable. In total, the 1070 highest paid people (identified as Key risk takers) received a variable remuneration of close to CHF 1 billion in 2017. These people, which represent 2.5% of all employees, received 30% of the total variable remuneration. The remuneration for the 13 members of the board amounts to CHF 12 million, of which CHF 4.5 million are reserved for the board chairman and CHF 800’000 are specifically reserved for the role of chairman of the board of the Swiss division, which ended up not realising its IPO. For Ethos, the proposed remunerations remain unacceptable in light of the high number of layoffs and the third recorded consecutive loss for the bank.
Enhance environmental and social responsibility
Ethos asks that the board also re-inforce its investment policy and reduce the financing of companies particularly exposed to climate change risks. In a 2017 ranking by the UK NGO ShareAction on taking into account climate change in the financing and investment policy, Credit Suisse ranks number 10 of 15 analysed European banks. Credit Suisse must therefore imperatively re-inforce its climate risk analysis and avoid financing companies active in tar sands, the Arctic or deep-sea drilling sectors, as well as coal production and coal-fired power plants.