Annual shareholder meetings were stormy at Credit Suisse and Barclays on Friday, with many attendees complaining bosses are getting too big a slice of bank income at their expense. But pay plans of both banks got enough votes to pass, the banks said. “You should be ashamed of yourselves for taking so much money away from us,” said Rudolf Weber, to applause from other shareholders at the Credit Suisse meeting. “We are the owners of this bank, and you are our employees. We should be the ones who decide what you earn.”
Barclays’ investors expressed discontent over the 17-million pounds pay package handed to CEO Bob Diamond last year. At Credit Suisse, chief executive Brady Dougan was not the top earner for 2011 - that honour went to Robert Shafir, who earned 8.5 million francs for running the asset management arm which posted a 10 per cent rise in pre-tax profit.
Almost a third of Credit Suisse shareholders rejected the bank’s pay plan on Friday and over a quarter of shareholders of UK rival Barclays voiced opposition to the bank’s remuneration report.
Jim Arnott, an executive coach in London who counts bankers among his clients, said: “People feel that bankers and the banking sector have lost touch with what’s real. The majority of people feel it’s just a culture of greed.”
Politicians and shareholder advisory groups urged investors to send a clear message to banks on the need for pay restraint.
“This is a good example of a company which recently ... has been paying three times as much in bonuses as it was in dividends to its own shareholders and it’s a good example of shareholders standing up and saying no, this is not acceptable,” UK Business Secretary Vince Cable told ITV News.
Barclays Chairman Marcus Agius apologised for badly communicating the bank’s pay strategy and promised to “materially” increase the dividend shareholders receive, helping to lift the bank’s shares more than 4 per cent.
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But he was heckled during his speech to a packed hall of about 2,000 shareholders and his comments about pay were greeted with laughter in some quarters.
Barclays paid out 660 million pounds ($1.1 billion) in dividends last year, while its bonus pot for investment bank staff was 1.5 billion pounds, and across the bank it paid 2.5 billion in “performance costs.”
Decent results from both Barclays and Credit Suisse this week may have taken the heat out of some investors’ anger, though many of the votes were made early in the week.
The Association of British Insurers and advisory group Pirc have opposed the pay for Barclays Chief Executive Bob Diamond, who took home 17 million pounds last year despite describing profitability as “unacceptable”.
The bank last week tweaked his award after investors voiced their anger in meetings with Agius, although many critics said it had not done enough.
Dougan was not Credit Suisse’s top earner for 2011 - that honour went to Robert Shafir, who earned 8.5 million francs for running the asset management arm which posted a 10 per cent rise in pre-tax profit.
Credit Suisse, which is cutting 3,500 jobs, said it has not paid top executives any cash awards for the past four years, opting for stock-based schemes linked to the bank’s share price.
At 1200 GMT, Credit Suisse shares were up 0.7 per cent at 22.26 francs, in line with Europe’s bluechip index.
The anger in Europe mirrors protests in the United States, where shareholders in Citigroup surprisingly voted down its executive pay plan last week, while protesters at Wells Fargo’s AGM turned up with a huge inflated rat, pockets stuffed with dollar bills.