* 67 pct back capital for bonuses, two thirds majority
* ISS and other shareholder groups had opposed plan
* Executive pay remains hot topic in banking sector
* CEO Brady Dougan earned $11.2 mln in 2013
(Recasts with vote result, updates throughout)
By Joshua Franklin
ZURICH, May 9 Credit Suisse's decision
to issue shares to pay staff bonuses received the backing of
shareholders by the narrowest of margins on Friday, amid
widespread criticism of the Swiss lender's remuneration policy.
Executive pay is a hot topic throughout the banking sector
and represents the latest in a string of problems for
Switzerland's second-biggest bank after it raised the pay of
Chief Executive Brady Dougan by more than a quarter last year.
That increase was awarded despite Credit Suisse's failure to
meet all its performance targets and boosting its reserves to
deal with a U.S. investigation into its role in helping wealthy
Americans to evade taxes.
At its annual shareholder meeting on Friday, a vote to issue
new shares for staff bonuses garnered just over the two-thirds
majority it needed to pass. Nearly 30 percent of investors
opposed the move, more than the quarter of investors who opposed
a similar measure last year.
Before the vote, Swiss shareholder groups Actares, Ethos and
ZCapital came out against the proposal, as well as influential
U.S. advisory group ISS.
"Pay at Credit Suisse is too high," Dominique Biedermann,
director at Ethos, which advises investors holding 3 percent of
Credit Suisse shares, told Reuters. "There is no reason why
banks should pay executives twice as much as large industrial
DIVIDEND PAYOUT ECLIPSED
Addressing the 1,543 shareholders, largely Swiss retail
investors, Biedermann criticised Credit Suisse for paying a
total of 1.36 billion Swiss francs ($1.55 billion) to 503 people
it considers key to how the bank deals with risk - an average
payment of 2.6 million francs.
"That is more than is planned for the 2013 dividend (of 0.70
francs per share)," Biedermann said.
A little more than 16 percent of shareholders also voted
against the proposed compensation plan, which included a 9.8
million franc payout for CEO Dougan. This was nearly two thirds
more than opposed the same measure last year. The plan was
backed by 81.3 percent of shareholders.
This year's compensation vote was non-binding, but will be
from next year after a proposed amendment was easily ratified at
The Credit Suisse vote came a day after Asia-focused bank
Standard Chartered saw more than 40 percent of its
shareholders oppose its compensation plan and last month more
than a third of Barclays' investors declined to back
its pay policy.
On Wednesday, more than 11 percent of shareholders at UBS
, Switzerland's biggest bank, voted against its bonus
plan, with 86 percent backing the proposal.
Credit Suisse has been a lightning rod for criticism over
pay in Switzerland since its decision to pay Dougan nearly 90
million francs in 2010, when a five-year share bonus programme
topped up his regular salary.
The chairman of the bank's Compensation Committee, Jean
Lanier, told investors ahead of Friday's vote that the bank had
listened to shareholder concerns to produce a stable and
understandable compensation structure.
'INTEGRITY AND FAIRNESS'
"We have, of course, to evaluate our practices and
procedures ... without forgetting the reason for compensation,
which is to attract, motivate and retain employees who share our
values and achieve results for our company with integrity and
fairness," Lanier said.
The bank's executive board was grilled by shareholders for
more than two hours at the meeting, with one shareholder
demanding a personal response from American-born Dougan on a
potential conflict of interest because he leads the banks
activities in both Switzerland and the United States.
"I'm not perfect, I'm sure," Dougan responded. "But I try
very hard, and I don't think there's any conflict of interest."
Credit Suisse is currently being investigated by the U.S.
Justice Department over the bank's role in helping wealthy
Americans evade U.S. taxes. The bank may end up having to pay as
much as $1.6 billion, a person familiar with the matter told
Reuters on Monday.
Credit Suisse Chairman Urs Rohner reassured shareholders on
Friday that the bank is working hard to seek a settlement with
"We are doing everything we can to resolve this matter
within the given framework of U.S. and Swiss law, in the best
possible way and in a timely manner," Rohner said.
($1 = 0.8781 Swiss Francs)
(Additional reporting by Oliver Hirt; Editing by David Holmes
and David Goodman)