Credit Suisse has cut its bonuses for top management by 40% after shareholder criticism of its plans to make a 78 million Swiss franc ($78 million) payout in spite of heavy losses.
The climbdown by Switzerland’s second-largest bank is rare and represents a victory for investors who are increasingly pushing for more modest pay in an industry where profits have fallen but pay has often remained high.
In a brief statement late on Thursday, the bank said it had taken the decision after shareholders “expressed reservations” about the planned payout, reversing its defense of the bonuses earlier on the same day.
American International Group’s directors also declined to award Chief Executive Officer Peter Hancock a cash bonus for last year, according to a proxy filing on Thursday, after the company’s poor performance roiled shareholders.
Credit Suisse’s move came amid growing public protest.
Earlier this week, a lawmaker who instigated a shareholder veto over excessive management pay in Switzerland, Thomas Minder, had urged investors to use this power to block the high bonuses for Credit Suisse’s top executives.
His comments added to pressure on the Swiss bank to rethink after several advisory groups told shareholders to oppose part or all of the payments when they vote this month.
Chief Executive Tidjane Thiam had been set to receive almost 12 million francs in pay and bonuses, a sum that would have made him one of Europe’s highest-paid bankers despite a multibillion-dollar loss last year.
Had shareholders rejected the plan when asked to vote on it on April 28, it would have been the first use of the Swiss veto at a leading company and a major set-back for Credit Suisse (CSGKF).
Investor advisers Institutional Shareholder Services (ISS), Ethos and Glass Lewis had told shareholders to oppose part or all of the payments.
ISS, which advises more than 1,700 of the world’s biggest investors, is highly influential and its recommendations are widely followed when shareholders cast their votes.
That high pay had strained investor patience with Credit Suisse at a time when the bank is considering asking them for money to shore up finances that were hit by a $5.3 billion settlement for selling toxic debt.
Credit Suisse did not specify the exact amount of the new bonus package.