Credit Suisse profits plummet 24%, cuts 2,300 jobs, then gives CEO & chairman 33% raise

Only in the world of big finance could this possibly make sense. What other industry rewards corporate leadership for failing in such a big way? The profits for Credit Suisse dropped a massive 24% last year, and their stock was mostly flat, yet they still handed out a fat 33% bonus to both their CEO and Chairman.Who do you have to kill in this industry not to get a raise?
According to the bank’s compensation committee, this special bonus was because the CEO was “positioning the firm for the future.”  But instead of actually waiting for that future success, they rewarded him now. It would make a lot more sense (and be more in line with industry standards) to reward the CEO for actual success, but in today’s banking world, nothing is normal.
UBS, another bank bailed out by the Swiss government, was also in the new last week for giving its CEO $9 million last year, and offering another $26 million “welcome package” to the new head of its investment banking division. Nothing saying “welcome” to a taxpayer bailout than $26 million for one guy.

 

Keep in mind that Switzerland just passed a new law that will provide shareholders a vote on executive pay, and there will also be limits on such pay. The decision to provide a bonus to a failing CEO has to be viewed in that context.
Also remember that the banking industry has been actively working to get around increased taxes on banker pay, including in the UK this year when the Wall Street darling, Goldman Sachs delayed bonuses for a while in order to get around paying taxes on them.
And it’s not entirely clear just how much money these banks actually have to keep throwing at their top executives.  We had reported the other day that the too-big-to-fail banks were getting an annual subsidy equal to their profits.  Then in a follow-up, we wrote about a new analysis showing the subsidy may be nearly ten times that amount, equal to the entire amount of the stimulus.  Generally, speaking, this is not an industry in which you have money to burn. Strike that — this is not an industry in which you should have money to burn. But burn they do.
I reported last month on the chairman of the Royal Bank of Scotland, whose $2 million a year salary and potential $9 million bonus is being sold to the public as “modest.”  I guess in those circles, it is.  Then again, modesty isn’t exactly this industry’s forté.  Remember when AIG, after it’s $182 billion bailout threatened to sue the US government because the bailout that saved them was “too onerous.”  How onerous would shutting down have been?
Then there was the $400 million taxpayer funded bonus in the UK. Here’s what we wrote about that last month:

In this case, the Royal Bank of Scotland, which is 82% owned by the state, plans to dish out nearly $400 million in bonuses to the very staff who are implicated in the bank owing a nearly $800 million fine for its role in the Libar-rigging scandal.  But the bank is state-owned, so the taxpayers are paying for both the fine, and the bonuses to the people who may be responsible for the bank being fined.

While the political class has made some minor attempts to curb the excesses of the banking industry, the banks have easily stayed one step ahead of these reforms, while thumbing their noses at everyone who saved them.
In other words, it’s just another day in the sleazy world of banking.  As Elizabeth Warren warned us at the Democratic convention last summer, “the system is rigged.”