Economy
Credit Suisse Group right to implement large payouts |
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| Economy | |
| Written by Gary Howes | |
| Wednesday, 03 February 2010 | |
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"Rewarding staff for long term commitment should be commended and not vilified."
Credit Suisse Group AG (NYSE:CS) has insisted that a round of hefty executive pay recently announced is in line with a long standing remuneration programme implemented in 2004. This morning the Times reported that a group of senior executives at Credit Suisse in London will receive multimillion-pound payouts next month in a move that will lessen the blow of the UK bonus tax. The group is understood to include James Leigh-Pemberton, head of Credit Suisse Group AG in the UK and one of the Government’s key advisers on the banking bailout, as well as other senior figures. But, the payments form the closing stages of a five-year incentive programme that Credit Suisse put in place to retain senior staff when it was struggling in 2004 and 2005, the Times reports. If anything such programmes should be encouraged and similar remuneration schemes should be studied by fellow banking players. Remuneration by share issue has traditionally been used as a mechanism to coax long term commitments out of company staff as the remuneration the employee can expect is linked to their, and the companies long term performance. It has been forwarded as possible answer to one of the perceived ingredients of the banking crisis - bank employees and traders taking unnecessary risks for short term gains. Yesterday this publication commented on the announcement by RBS that the bank was in effect cloaking bonus payments in a share incentive programme. RBS is reported to be allowing employees to redeem cash after 12 weeks, making a mockery of the long term emphasis that such schemes are meant to embody. The final sum of the payouts at Credit Suisse will be determined by Credit Suisse’s share price performance over the next few weeks. Credit Suisse surprised the City two weeks ago by saying that its 400 UK managing directors would bear the brunt of the Chancellor’s 50 per cent bonus tax. Their bonuses have been reduced by 30 per cent from what they were expected to be. Credit Suisse Group AG shares closed 3.86% higher on Wall Street yesterday after a strong all round performance for financial stocks on the exchange.
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