During bonus season last year, Credit Suisse announced that the money employees earned in 2010 would be paid out over 2011, 2012, 2013 and 2014 (all of which was subject to clawback rules). People were not thrilled! This year, in an effort to show they've been listening, management has announced some big changes to the compensation plan. 1) Only those making more than 250,000 Swiss francs (which CS points out are few and far between) will be subject to deferred compensation (previously it was any amount above 50,000) and 2) Of the deferred shares being awarded, you’ll only have to wait three years, and not four, for it to vest. Pretty sweet deal if you ask the other Swiss bank in town, where bonuses (a sheet of bubble wrap and 15 free minutes to cry publicly without judgement) paid out over any period of time would be a step up. The suggestion box is working!
Today we are announcing the 2011 compensation plan. Adjustments to the existing plan have been made to improve the competitiveness of our compensation structure in what continues to be a challenging business and market environment, and in response to your feedback. The main changes include moving the deferral threshold from CHF 50.000 discretionary variable incentive award (Award) to CHF 250.000 total compensation and changing the deferral rates. This simplifies our deferral scheme and puts us more in line with our market peers. Only a small number of employees will have more compensation deferred under the updated plan. We have also decided to give the deferred portion in the form of shares, with performance conditions for Managing Directors and select groups of employees, and discontinue APPA. The vesting period is now limited to three years instead of four.
Employees who are subject to deferral have the opportunity to elect to receive a portion of the deferred award in cash rather than shares. Further details of this award and the election process will be communicated in the next few weeks. Our objective with regard to compensation policy continues to be to reward employees fairly and competitively as they build the firm and franchise for the long term. We believe this is a responsible, equitable compensation plan balancing the interests and expectations of our employees, shareholders and regulators.
Credit Suisse Changes Compensation Practices [Dealbook]