At Credit Suisse, pay for performance is out. With 2016's bonuses, say hello to remuneration for participation.
To be fair, judging the bank's ongoing self-transformation nearly two years into Tidjane Thiam's tenure at Credit Suisse is not an easy task. There have been layoffs – plenty of layoffs – amid a grinding shift from investment banking to wealth management. In the process, Thiam has had some less-than-stellar moments, like calling bond traders “ugly ducklings” and suggesting investment bankers are too dense to understand the concept of pay cuts, incidents that have helped cement a rather rocky relationship. Then there was the whole $2.3 billion 2016 loss thing (owing mostly, though not entirely, to settling U.S. legal charges).
But what doesn't kill Thiam apparently has only made him richer.
Mr. Thiam earned 11.9 million francs in total compensation last year, his first full-year at the Swiss banking giant. The bank cited his “progress toward the successful execution of the group’s strategy during the first full year of the three-year strategic plan.” Mr. Thiam’s compensation rose from 4.6 million francs in 2015 for the half-year he was there.
It's not just Thiam pulling in the Swiss cheese. The wider bonus pool rose 6 percent for 2016, to more than $3.1 billion. But that bump has less to do with what employees did than what they didn't do: leave.
Credit Suisse “experienced key employee retention issues” in the first quarter of last year after slashing compensation, it said in the report. The increase in the bonus pool for 2016 should “ensure that employees who met their performance targets could be compensated in line with the market in order to retain key talent,” particularly in divisions active in investment banking.
Get a few dozen more bankers to leave in 2017 – voluntarily, that is, apart from the six thousand already slated to be laid off – and who knows, the remaining Credit Suissers might see as much as a double-digit raises in a year's time.