Compensation Resources, Inc. - Executive Compansation Consultants

Credit Suisse Compensation Structure Amendments

CRI News. Posted: 2009-10-28 07:49:05

Credit Suisse recently announced a change to the compensation structure for its Directors and Managing Directors for compensation earned in 2009 and paid in 2010. According to the press release from the Company , the change is consistent with the guidelines for best practices announced by the G-20 summit.

Key Changes to the Plan:

1. The Company will shift the mix of fixed (base salary) compensation and variable (bonus) compensation to provide for a higher percentage of the total compensation to be in the form of fixed base salaries. While increasing fixed compensation costs for the company, the intent appears to be to remove some of the potential for inappropriate risk taking by limiting the upside of that variable piece of the compensation package.

2. For employees earning a variable compensation component greater than $100,000, that bonus will be split 50/50 between Scaled Incentive Share Units (SISU) and Adjustable Performance Plan Awards (APPA).

a. SISUs are share units whose value is determined by Credit Suisseï¿½s average Return on Equity. The base share amount will vest annually over four (4) years. The previous plan vested in three (3) years. The value of these new SISUs can increase or decrease, depending on the Company's RoE.

b. APPAs are cash-based with a notional cash value subject to a three-year, pro-rata vesting schedule. Awards may adjust upwards annually, based on the Company's RoE in the respective year. However, if an employeeï¿½s individual business unit is not profitable, the value of the award will be adjusted downwards.

While this change in the compensation structure at Credit Suisse may be appropriate for a large bank, it is important to note that such measures cannot be applied to all situations in every company looking to address their compensation needs. At Compensation Resources, Inc. (CRI), our compensation professionals work with each of our clients one-on-one to develop a highly customized approach. Our consultants seek to first assess the current situation, review perceived needs and concerns, evaluate possible alternatives, and work collaboratively to design and develop tailor-made solutions that work for that specific client. Our clients receive the benefit of our years of experience in the field of compensation, while receiving the individual attention to customize cutting-edge concepts to the client's specific needs.