Credit Suisse Cuts CEO Brady Dougan's Pay -- Update

By John Letzing 

ZURICH-- Credit Suisse Group AG on Friday said departing Chief Executive Brady Dougan received a pay cut for 2014, a year when the Swiss bank struggled to maintain its profit as it was dogged by legal issues.

Zurich-based Credit Suisse said on Friday that Mr. Dougan, who has led the bank since 2007 and is due to step aside at the end of June, received 9.7 million Swiss francs ($9.8 million) in total compensation for 2014, compared with 9.79 million francs in the prior year.

Of Mr. Dougan's pay, 2.5 million francs consisted of base salary, consistent with the prior year, and about 5.3 million francs came in the form of incentive awards--a reduction from the 6.2 million francs in incentive awards for 2013.

The disclosure of Mr. Dougan's pay reduction comes a week after rival Swiss bank UBS AG, which has also been hindered by legal issues, said its CEO Sergio Ermotti received an increase in total compensation for 2014--to nearly 11.2 million francs, from 10.7 million francs a year earlier.

Credit Suisse noted that the results at its so-called nonstrategic businesses--those that the bank is trying to wind down--missed their performance targets last year, mainly because of heavy legal provisions. Still, the bank said Mr. Dougan delivered a strong performance in 2014, as he oversaw a reduction of Credit Suisse's balance sheet and costs, and achieved the bank's target for building up its capital cushion by the end of the year.

Credit Suisse announced earlier this month that its long-standing chief executive would be replaced by Tidjane Thiam, the current CEO of U.K. insurer Prudential PLC. Mr. Thiam will join an 11-member executive board that collectively received 64.06 million francs in compensation for last year, compared with 64.77 million francs in the prior year for what was then a nine-member group.

Credit Suisse had previously disclosed that executive board members including Mr. Dougan would have their bonuses for last year reduced by the equivalent of 20%, tied to the bank's settlement last May of a U.S. probe into whether it had helped American clients evade taxes. Credit Suisse agreed to pay $2.6 billion to settle the matter and pleaded guilty to a criminal charge of conspiring to aid tax evasion.

Credit Suisse has said previously those bonus cuts were linked to their responsibility for "safeguarding the long-term reputation and professional integrity" of the bank.

Overall, Credit Suisse reported a 19% decline in net profit for 2014 compared with 2013, despite net revenue rising 2%.

The bank's 2014 profit figure was retroactively reduced last month, as it disclosed an additional 277 million francs in legal provisions related to the sale of mortgage-backed securities in the U.S. before the financial crisis.

A number of legal actions in the U.S. have alleged that Credit Suisse misrepresented the quality of the loans in its mortgage-backed securities sold during the lead up to the crisis. The bank said a number of claims against it have been dismissed or settled, while it continues to contest others.

Write to John Letzing at [e-mail]

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