Bonus cancellation prompts panic inside and outside Credit Suisse
Following yesterday's Swiss government edict cancelling Credit Suisse's deferred bonuses, staff both inside and outside the bank are rushing to check the small print on their bonus documentation. The fear is that any unpaid bonuses are now void.
"We have no idea what's happening," says one former Credit Suisse MD who was let go by the bank earlier this year. "Everyone that left has deferred shares locked in with Credit Suisse and we're waiting to find out whether those shares have been lost. We're emailing HR but are hearing nothing back."
Another former MD suggests that deferred cash vesting should be ok and equity should be ok, but that the coco-based bonuses Credit Suisse awarded senior staff before 2022 will be zeroed. "This is just my expectation," he admits.
In fact, yesterday's release from the Swiss government implies that both deferred cash and deferred stock bonuses could now be withheld. It states: "This measure relates to already granted but deferred remuneration for the financial years up to 2022, for example in the form of share awards." Similarly, despite conflicting reports on Coco bonuses, the likelihood is they will be worth nothing too.
As people at Credit Suisse struggle to understand the implications of the move, employees in London say the office printers are working overtime as people print out their bonus contracts. "There must be over 100 printers in the office and a lot are printing this stuff," says one director. "The bonus documentation runs into 100s of pages and I have found a big tome of T&Cs for deferred comp left next to the printer because it wouldn't fit into the slot of the recycling bin."
Credit Suisse bonuses are full of a mass of complicated structures, including deferred cash, deferred stock, retention bonuses and Coco bonds paid to senior staff in previous years. While deferrals for some junior staff were due to payout this week, a tranche for more senior staff was due to vest in April. "There are a number of different deferred deals," says the director. "Some people get cash deferred, some get clawbacks, some got all their guaranteed bonuses in shares and have been hit very hard by this."
The cancellation is a double blow to people who were already let go by Credit Suisse and were relying on the vesting of guaranteed bonuses to pay for living expenses while they look for new jobs.
As we observed at the weekend, people at Credit Suisse stand to lose a lot from the UBS deal. At the end of 2022 there were CHF1.3bn in outstanding deferred compensation awards, all of which are presumably now cancelled.
However, insiders say this understates the extent of the pain. Many at Credit Suisse were holding onto stock that had vested in the hope that it would rise again after years of decline.
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