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We are committed to ensuring that the way in which we compensate 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 performance 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.
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 pay decisions with respect to gender.
- 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 2021, 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, the Compensation Committee made several revisions to the Executive Board compensation framework that are detailed in the Annual Report. For example, under the new Executive Board compensation framework, ESG-related factors will play an even greater role in compensation outcomes. That is, the non-financial assessment will be considered as part of the overall Executive Board incentive pool determination (delivered in short-term and long-term awards), and the Compensation Committee will place a 30% weighting on Risk and Controls, Values and Culture, and Sustainability to determine the total Executive Board incentive pool.
To reflect the unprecedented issues that occurred in 2021 the Compensation Committee recommended, and the Board approved, a Group variable compensation pool of CHF 2,000 million, 32% lower than last year’s CHF 2,949 million pool. The Compensation Committee considers that this appropriately reflects the significant impact of the Archegos and SCFF matters on our stakeholders, while recognizing the contributions of most of our employees and the competitiveness of the talent market. In addition to the strong underlying financial performance, the Compensation Committee also took into account non-financial factors such as the improvements that have been implemented during the year to strengthen the risk and control framework.
Total Executive Board variable compensation was 64% lower than the prior year, with the comparison impacted by the cancellation of the 2020 STI and the 2021 LTI.
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 2022. More information on the Group, Executive Board and Board of Directors compensation can be found in the 2021 Compensation Report.