Credit Suisse Offering Upfront Cash Bonuses to Senior Employees

Credit Suisse Group AG is offering its senior bankers an upfront cash award for the second year in a row, in an effort to motivate them to remain with the company during its restructuring process.

An internal memo obtained by Bloomberg has revealed that managing directors and directors in most locations will receive the cash component of their variable 2022 compensation immediately. If they depart the bank within three years, they will be required to reimburse the funds in a proportional manner. The cutoff date to accept the upfront payment is January 30th.

Chairman Axel Lehmann recently referred to 2022 as "horrifying" due to billions of dollars in client outflows, and the Swiss lender is expected to post another annual loss. Bloomberg reported earlier this month that staff are preparing for a 50% decrease in the total bonus pot.

A representative from Credit Suisse chose not to provide any remarks regarding the payments.

The Executive Board declared in a memo that the compensation pool for this year would be lower than in the past. They stated that the upfront cash award was a way to acknowledge the efforts of the senior leaders and to reward their loyalty.

In 2021, Credit Suisse allocated 40% of its regular bonus pool as upfront awards in an attempt to motivate key personnel during a restructuring effort that did not come to fruition. Additionally, the bank gave certain senior staff members a special long-term award and made retention payments to keep essential employees. In 2020, the bank was required to raise $4 billion in capital and its stock price dropped to an all-time low.

Despite offering upfront cash awards in an attempt to keep staff, a number of departures still occurred. Many high-profile bankers, particularly in Asia, left for competitors such as UBS Group AG, feeling dissatisfied due to the various scandals that have plagued the bank in recent years.

It is expected that bonus outcomes for 2022 will vary significantly, as the bank must take into account the underperformance of some divisions while still incentivizing employees in other areas. The memo did not provide any information regarding the total size of the bonus pool or the size of the initial payments.

The Executive Board declared that the compensation structure for 2022 is designed to create a harmonious equilibrium between the needs of our employees and those of our shareholders and regulators.

Credit Suisse has announced that it is expecting to report a loss of up to 1.5 billion francs ($1.64 billion) for the last quarter of 2020. This is due to the outflow of client funds that the lender has experienced. When the fourth-quarter earnings are released, the progress of regaining those clients will be revealed. Unfortunately, the lender has reported a loss in each of the previous three quarters.