Thursday, April 1, 2010

Credit Suisse’s Dougan to Get $67.6 Million in Stock

Credit Suisse Chief to Get SF71 Million in Performance Payout

March 31 (Bloomberg) -- Credit Suisse Group AG Chief Executive Officer Brady Dougan will receive shares valued at 71 million Swiss francs ($67.6 million) under an incentive program.

Under the five-year plan, as many as 400 staff at the managing director level and above will receive shares on April 20 worth a total of about 3.1 billion francs at today’s closing price, based on details of the program released by Zurich-based Credit Suisse today.

The program was “designed to compensate, incentivize and retain senior management and executives particularly during 2004 and 2005, a period of fundamental change for Credit Suisse,” the bank said in an e-mailed statement.

The Performance Incentive Plan was created in the year that Oswald Gruebel took over as sole chief executive of the bank after his co-CEO, John Mack, was ousted. The plan started on Jan. 20, 2005, and the initial grants were priced at 47.40 Swiss francs, the closing stock price on that day.

At today’s closing price of 54.35 francs, the stock is up 15 percent in Swiss trading. Over the same period, shares of UBS AG have plunged 60 percent, Barclays Plc lost 37 percent, Morgan Stanley dropped 36 percent and Deutsche Bank AG shed 13 percent.

Some rivals have performed better than Credit Suisse. Goldman Sachs Group Inc.’s stock is up 65 percent since Jan. 20, 2005. Gruebel, who left Credit Suisse in 2007 and was succeeded by Dougan, became CEO of UBS in February 2009. Mack became chairman and CEO of Morgan Stanley in June 2005 and gave up the CEO role at the end of last year.

No State Aid

Paul Calello, head of Credit Suisse’s investment bank, was awarded shares worth about 37 million francs at today’s price and Walter Berchtold, CEO of private banking, will receive shares valued at about 34 million francs, based on details of the plan provided by Credit Suisse.

Today’s payment calculation reflects share performance over the last five years as well as earnings over the period and performance relative to rival banks, Credit Suisse said.

The stock will be paid from treasury shares and won’t dilute existing investors or affect first-quarter results, the bank said. The awards are subject to a withholding tax of about one-third.

Dougan was paid 19.2 million francs in compensation last year, an almost seven-fold increase, including 17.9 billion in bonuses and a fixed salary of 1.25 million francs, according to the bank’s annual report, published March 25.

Credit Suisse, Switzerland’s largest bank by market value, didn’t require government aid during the credit crunch. The company reported net income of 6.72 billion francs for 2009.

Long-Term Performance

UBS amassed $57.4 billion of writedowns and losses from the credit crisis, data compiled by Bloomberg show. The Zurich-based company turned to the Swiss government in 2008 for a 6 billion- franc capital injection to help it spin off risky assets into a Swiss National Bank fund.

After the financial crisis, shareholders, regulators and politicians called for Wall Street banks to better align their employees’ compensation with the long-term risks the companies were taking. As a result, many firms implemented plans that have similarities to Credit Suisse’s PIP plan.

Goldman Sachs, which set a Wall Street pay record in 2007, last year paid all of its management committee members in stock that they couldn’t sell for five years. Morgan Stanley paid executives in performance units that are tied to the firm’s return on equity and the firm’s total shareholder return compared with nine rivals.

--Editor: Frank Connelly

To contact the reporter on this story: Warren Giles in Geneva at

To contact the editor responsible for this story: Frank Connelly at

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