Compensation

We are committed to ensuring that compensation contributes to the achievement of the Group’s objectives in a way that does not encourage excessive risk-taking or the violation of applicable laws, guidelines or regulations, taking into account the capital position and economic performance of the Group over the long term. Our focus on equality, diversity and inclusion is reflected in our approach to compensation.

The objectives of the Group’s compensation policy include creating sustainable value for the Group’s shareholders and motivating employees to achieve results with integrity and fairness. The key elements of the compensation framework for Group employees include fixed compensation (base salary and allowances, pension and other benefits) and variable incentive compensation, which is determined based on the Group’s performance, product area, as well as individual performance, market position and trends.

A further objective of the compensation policy is to ensure that the proportion of variable compensation is appropriate to the employee’s role and encourages appropriate behaviors and actions. A percentage of the discretionary variable incentive compensation is deferred for persons with a total compensation of CHF/USD 250,000 or higher (or local currency equivalent), mainly in the form of share-based awards with vesting periods of at least three years. All deferred compensation awards contain provisions that enable the Group to reduce or cancel the awards prior to settlement under certain circumstances.

For the Executive Board, variable incentive compensation comprises short-term incentive (STI) awards, which are linked to the achievement of pre-defined annual performance objectives, and long-term incentive (LTI) awards, which are based on future performance outcomes measured against pre-defined performance targets over a period of three years. Maximum STI and LTI opportunity levels for each Executive Board member are clearly pre-defined based on market competitive compensation for the role and communicated at the start of the performance cycle, expressed as a multiple of base salary. The maximum payout level for each award is capped at 100% of the opportunity. At the end of the respective performance cycles, performance against the pre-defined objectives is disclosed in the Compensation Report, which is part of Annual Report.

ESG considerations are integrated into various stages of the compensation process:

• Group variable incentive pool: the Compensation Committee considers audit, disciplinary, risk and regulatory-related issues, among other factors, in order to determine appropriate adjustments to the Group, divisional and corporate functions pools. In addition, one of the key drivers of bonus pool development at the divisional level is economic contribution, which factors in the level of risk taken to achieve profitability;
• Executive Board annual STI awards: the non-financial component of Executive Board annual awards includes the consideration of ESG factors, particularly the integration of ESG into investment processes, client satisfaction, corporate responsibility, talent management, diversity and inclusion, compliance, risk management, and conduct and ethics; and
• Equal pay policy: Credit Suisse does not tolerate any form of discrimination, in particular discrimination based on ethnicity, nationality, gender, sexual orientation, gender identity, religion, age, marital or family status, pregnancy, disability, or any other status that is protected by local law. We recognize and value diversity and inclusion as a driver of success. Our policies and practices support a culture of fairness, where employment-related decisions, including decisions on compensation, are based on an individual’s qualifications, performance and behavior, or other legitimate business considerations, such as the profitability of the Group or the division and department of the individual, and the strategic needs of the Group. Consistent with our long-term commitment to fair pay, the Compensation Committee reviews our pay practices on a regular basis to identify potential areas requiring more attention.

The compensation framework and practices set out in the Group’s compensation policy are reviewed and assessed by the Compensation Committee as a part of the annual review. During 2020, we were actively engaged with shareholders, regulators, and other stakeholders, both to listen to their views on our current compensation design, and to understand any thoughts they had on areas of focus for the Compensation Committee in future years. In its annual review of the overall compensation framework at Credit Suisse, the Compensation Committee took into account the feedback received from external stakeholders, as well as market developments to assess whether current practices remain appropriately competitive. As a result of this review, it determined that the overall compensation framework continues to be broadly fit for purpose, with some refinements for 2021.

In determining the Group’s variable incentive compensation pool for 2020, the Compensation Committee reviewed the Group and divisional financial performance, relative performance versus peers, market position and market trends, as well as the current social and economic conditions and risk, control, compliance and conduct and ethics considerations. The total variable incentive compensation awarded for 2020 was CHF 2,949 million, 7% lower than the prior year, and reflects a balance between lower reported results, impacted by significant items, and an increase in adjusted income before taxes excluding significant items, as well as a response to the COVID-19 pandemic and resulting economic environment. Total Executive Board compensation was 12% lower than the prior year, mainly due to the 30% decrease in the amount of annual STI variable compensation awarded. This decrease was primarily driven by the higher provision for credit losses, increased major litigation provisions and the York impairment. After careful consideration, the Compensation Committee decided not to modify any of the performance conditions or features of “in-flight” awards. Therefore, the Compensation Committee decided not to exercise any discretion (positive or negative) to modify the Group or Executive Board variable compensation outcomes.

In accordance with Swiss law, the Group will submit proposals on Board of Directors and Executive Board compensation for binding shareholder approval at the AGM in 2021. More information on the Group, Executive Board and Board of Directors compensation can be found in the 2020 Compensation Report.