[HN Gopher] Switzerland bans deferred bonuses for Credit Suisse ...
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Switzerland bans deferred bonuses for Credit Suisse staff
Author : belter
Score : 95 points
Date : 2023-03-21 18:07 UTC (4 hours ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| sschueller wrote:
| I hope this applies globally and not only to Switzerland. The
| bonus structure is quite different between Switzerland and other
| countries some of which have very high bonuses payouts by CS.
| mt360 wrote:
| Just thought I'd leave this here:
| https://www.reddit.com/r/Bitcoin/comments/11wixa0/excredit_s...
| codehalo wrote:
| Up next: Jamie Dimon.
| paddw wrote:
| Shouldn't this be up to UBS?
| fsckboy wrote:
| maybe/probably UBS said to the govt, "we'll take this bank over
| if you cancel all these payouts as part of the deal"
|
| frequently in acquisitions/mergers/spinoffs, all the bad news
| is delivered before the deal so the new management can start
| fresh, and blame anything before on their predecessors.
| k8sToGo wrote:
| No because CS already got $50B help before the acquisition
| bertil wrote:
| I'm assuming that UBS has less agency to do it: if they do,
| they might run aground with the employment contracts. A
| government might have the authority to override those.
| [deleted]
| cm2187 wrote:
| tbh, according to another FT article [1], UBS plans to fire up to
| 1/3 of the combined 120k workforce, and announced previously the
| cuts will be pretty much all CS. So up to 40k employees out of
| 50k. So these deferred comps wouldn't be worth much to them for
| very long anyway.
|
| [1]
| https://www.ft.com/content/c22e5235-6947-4781-8fce-d510914cb...
| user00012-ab wrote:
| Now introducing the deferred deferred bonuses.
| belter wrote:
| https://archive.is/wip/XbmGi
| jmclnx wrote:
| > The Swiss government has banned Credit Suisse from paying
| deferred bonuses awarded before 2022 in a move that has sparked
| more upset from staff at the failed bank
|
| Maybe I am a bit suspicious due to what has happened in "high
| finance" for the past decade or 2, but that statement indicates
| to me it is the "regular" employees that will loose their bonus.
| What about the upper-level execs who probably have an employment
| contract. Will they loose to ?
| killingtime74 wrote:
| Interesting. Do you think regular employees don't have
| employment contracts?
| jmclnx wrote:
| Not in my fortune 500 company :) I signed nothing when I was
| hired.
| nix23 wrote:
| [dead]
| tremon wrote:
| How did you know that you were hired, and what your pay or
| hours would be?
| [deleted]
| jimnotgym wrote:
| Wow, in what country? Switzerland?
| lazide wrote:
| Not even an NDA? Or to acknowledged receiving an employee
| manual/whatever?
|
| Sounds like someone in HR is going to get fired soon!
| tzs wrote:
| Employment contracts are not required to be signed, or even
| in writing.
|
| You almost certainly do in fact have an employment
| contract.
| troad wrote:
| That would be very uncommon / probably illegal in Europe.
| If there's one thing Europeans love, it's paperwork!
| burkaman wrote:
| It's very uncommon in the US too, and I'm having a hard
| time believing it could be true at a Fortune 500 company.
| Big companies go through all kinds of audits and
| certifications that would definitely require all
| employees to sign contracts and NDAs.
| johncessna wrote:
| Employment contracts, especially for white collar work,
| are rare in the US. Signing NDAs and acknowledging that
| you've read the handbook, while common, are not
| employment contracts.
| burkaman wrote:
| Interesting. I've always at least signed an offer letter,
| which is a contract laying out what the job is, how much
| I'll be paid, specifying at-will employment, etc. I'm
| sure European contracts are more involved, but I don't
| think I would ever take a job without the employer at
| least agreeing to pay me in writing.
| lazide wrote:
| While not employment contracts, they are contracts
| related to, and typically required for employment.
| goodlinks wrote:
| Ive only signed a couple of contacts ever, where the
| company really wanted it and were not forgetting.
|
| I may be wrong but the offer letter is enough to insist
| your first paycheck and from there on in its obvious the
| company thinks you are an employee therefor subject to
| all employment law, most of which is about not changing
| the staus quo without due process. E.g. In the EU holiday
| pay cannot be lower than the previous 13 wk average
| doesnt matter what your contract says.
|
| Employment law as far as i have seen in the UK (thanks to
| the EU) is all you are ever going to get anyway in any
| tight situation. Anything else in a contract is likely
| only gling to be an attempt to reduce that liability
| (which then in turn often invalidates the whole thing
| anyways).
| alistairSH wrote:
| It's probably not so much the existence of a contract, but
| the contents and specificity of any contract.
|
| In the US, most employees below VP or director, will have
| very generic employment contracts. I've been at my employer
| for 20+ years and haven't signed a contract since I was
| hired, even through one merger and several PE acquisitions. I
| haven't signed anything about my normal salary either - they
| send me a notice every year when raises are granted and my
| reading it is treated as acceptance.
|
| My bonus is loosely based on company financials, and subject
| to board and executive approval. As far as I know, the pay-
| out schedule isn't set in stone either. I have no doubt that
| if the company failed, I wouldn't see a penny of any unpaid
| bonus.
|
| I'm not sure that's true for executives, who often have
| individual contracts with more specifics about bonuses,
| whether they be cash, stock, or something else.
|
| Such is life in an at-will state.
| dsfyu404ed wrote:
| VP at a bank is basically just a checkbox.
|
| Depending on the subset of banking you work in basically
| everyone is a VP because everyone needs that title in order
| to do their jobs without running afoul of the regulations.
| These people will have cookie cutter employment contracts
| if any.
| alistairSH wrote:
| Yeah, my comment was based on my experience in the
| software world. It's definitely true that there area lot
| of VPs of one variety or another at banks, even for
| individual contributors. Super weird, but it's been that
| way forever.
| btilly wrote:
| I've been told that the reason is because some subset of
| CEOs get offended at being shuffled off to a low ranking
| employee. So they get to meet VPs and are happy, without
| realizing where said VP really was in the org chart.
|
| I don't know how true this is, but i was told it by my
| brother about 20 years ago, who at the time was a (low
| ranking) VP at a bank.
| jjallen wrote:
| Pretty much every employee has a contract in Switzerland. It
| is a document that governs the relationship between employer
| and employee. Not sure how things would work without one.
| It's a very standard practice. Source: I live in and own a
| company in Switzerland.
| TylerE wrote:
| Spoiler: It does not work well for the employee, in most
| cases.
| fweimer wrote:
| In Germany, there's no requirement for a written employment
| contract. The contract is formed implicitly if the employee
| keeps showing up for work, and the employer keeps paying
| them. Most employers use written contracts to override some
| legal defaults where this is permitted (e.g., symmetric
| notice periods instead of the default asymmetry favoring
| the employee). But the law is written in such a way that
| you don't necessarily have to do this.
| config_yml wrote:
| Same in Switzerland
| nix23 wrote:
| [dead]
| fnordpiglet wrote:
| Generally bank executives have aggressive clawback provisions
| in their contracts, far in excess of line employees. They often
| can even claw back already paid and delivered (and potentially
| spent!) money from quite some time back if there's cause.
|
| Clawing back line employees deferred comp is mean. Sarah in
| client confirms likely did her job just fine. She should keep
| her deferred comp.
| Kuraj wrote:
| I agree. Especially since Sarah in client confirms might soon
| have to look for a new job.
| taeric wrote:
| I don't want to pile on the execs more, but I am suspicious
| of the "far in excess" number. In absolute terms, sure. Line
| workers probably don't have any clawback. But even after that
| clawback, I'm guessing the execs walk away fine?
| fnordpiglet wrote:
| I'm not familiar with CS' structure but the ones I am
| senior Execs can have 10-15 years of comp clawed back. Line
| employees still have clawbacks but it's usually narrower
| (3-5 years) and a much smaller percentage of comp (100% vs
| 10% for example)
|
| Note the most serious clawbacks are for criminal behavior
| or extraordinary mismanagement. I doubt they're invoking
| severe clawbacks at the extremes (100% for example)
| mpweiher wrote:
| Top executives already pocketed 32 _billion_ ChF in bonuses since
| 2013. In the same period, CS lost 3.2 billion ChF.
|
| So locking the stable door after the horses looted the barn and
| burnt it to the ground before bolting.
|
| By law, Bankers should be paid no more than public officials.
|
| https://www.tagesschau.de/wirtschaft/weltwirtschaft/credit-s...
| slackfan wrote:
| By law, public officials should be paid minimum wage.
| pjc50 wrote:
| So you want the entire set of public services run through
| private contracting firms instead who take 10% off the top
| for directors and another 10% for shareholders?
| sesuximo wrote:
| Seems like a recipe for unmotivated and low quality govt.
| Eumenes wrote:
| Sounds like what we have currently in the US. I have a
| family member who is a manager for a state unemployment
| department ... She oversees like a dozen reps that help
| handle unemployment claims. She makes $70/hr with a fully
| paid for pension + benefits and like 4-5 weeks PTO.
| Recently had a friend get laid off and filing for
| unemployment. Their queues have like 5-6 hour waits and you
| can schedule a follow up ... like a week in advance.
| soperj wrote:
| Or a much higher minimum wage.
| agilob wrote:
| So nothing changes, but it's cheaper
| eloff wrote:
| I'd rather not have a government run by the same quality
| people who barely manage to operate the local Burger King.
|
| The government is already bad enough.
| msm_ wrote:
| > Top executives already pocketed 32 billion ChF in bonuses
| since 2013. In the same period, CS lost 3.2 billion ChF.
|
| How were shareholders OK with this? After all, top executives
| are still "just" employees of the real company owners - stock
| owners.
| lazide wrote:
| If you can't get rich by making the business do better, plan
| B is making sure your bosses love you, no?
|
| And who is going to make sure they do amazingly well in the
| interviews for a role like this but people who would have no
| problems making their bosses _really_ love them?
| JumpCrisscross wrote:
| > _How were shareholders OK with this?_
|
| Credit Suisse paid a decent dividend [1]. Also, calling a
| spade a spade, the Saudis are this cycle's German landesbank:
| dumb money.
|
| [1] https://ycharts.com/companies/CS/dividend_yield
| mhh__ wrote:
| Losing the staff is worse
| burkaman wrote:
| The top executives are likely good friends with board members
| and large shareholders.
| AdrianB1 wrote:
| Shareholders in public companies have the same power as
| individual citizens in voting for a government: in theory
| they have all the power, practically they cannot do much. The
| fragmentation of the power of the decision makers is what
| keeps corrupt governments and company execs in power.
| codehalo wrote:
| As long as it's not crypto related, it's fine. Banks are
| allowed to rug pull.
| aaomidi wrote:
| Shareholders only care about fiduciary responsibility when it
| comes to laying people off it seems.
| pjc50 wrote:
| By law, google employees should be paid no more than public
| officials.
|
| (No, this doesn't make any sense either)
| mpweiher wrote:
| Google doesn't have a bail-out guarantee by the government.
|
| If the risk is privatised, the profits can be privatised.
|
| If the risk is socialised, the profits are also socialised.
|
| Simples.
|
| See: https://en.wikipedia.org/wiki/Moral_hazard
| boeingUH60 wrote:
| >By law, Bankers should be paid no more than public officials
|
| How would you intend to enforce this? Declare a law that no
| banker must be paid more than than the current highest
| government salary? Who defines a "banker"...does that same rule
| apply to the CEO?
|
| I understand that Credit Suisse is a poorly-run and incessantly
| corrupt company, but many times, people suggest "hey, that
| should be a law!" without thinking it through.
| lagolinguini wrote:
| > How would you intend to enforce this? Declare a law that no
| banker must be paid more than than the current highest
| government salary?
|
| Salaries of government employees and public officials are
| already dictated by laws in most countries, so this isn't
| like it is some sort of new area of legislation that doesn't
| have decades of legislation and case law for reference.
| psychlops wrote:
| And the laws work so well. In the US they come in on a
| token salary and retire multi-millionaires with pensions.
| mpweiher wrote:
| > How would you intend to enforce this?
|
| By law.
|
| > Declare a law that no banker must be paid more than than
| the current highest government salary?
|
| No. Simply have a law that employees of a bank that has been
| deemed "too big to fail" will be regarded as public employees
| (which they effectively are) and are paid according to the
| BAT, the Bundesangestelltentarifvertrag, in Germany. Other
| countries will have similar official regulations as to how
| public sector employees are paid.
|
| "Too big to fail" = "Too big to bonus"
|
| > Who defines a "banker"?
|
| Employees of a bank that has been classified as systemic, as
| too big to fail. If the risk is public, the pay is public. If
| you want private pay, your bank must be small enough that the
| public does not carry the risk.
|
| > ..does that same rule apply to the CEO?
|
| Of course. _Especially_ to the CEO.
|
| > ...without thinking it through.
|
| Just because you haven't thought this through doesn't mean I
| haven't.
|
| > Credit Suisse is a poorly-run and incessantly corrupt
| company
|
| This isn't a singular problem of Credit Suisse. 2008 was just
| the same, only (so far) on a larger scale. I am usually
| extremely loath to declare simple/moralistic causes for what
| appear to be complex and systemic issues.
|
| But in these cases, it really was that simple. The bankers
| knew that it was a sham. They kept the sham going because
| they wanted to get theirs before the music stopped. When the
| music stopped the public had to bail them out. And the
| bankers were still rich. Because profits were privatised and
| risk was socialised.
|
| Fool me once, shame on you, etc.
|
| See also: https://en.wikipedia.org/wiki/Moral_hazard
| wolpoli wrote:
| > By law, Bankers should be paid no more than public officials.
|
| But then all the experienced bankers will leave for another
| country. We can't not let them leave.
| AmVess wrote:
| The same bankers who flew CS into the ground?
| wolpoli wrote:
| I can't say whether banks in other countries would hire the
| former CS bankers, but surely they'll be interested in the
| one that never worked at CS.
| config_yml wrote:
| Thiam did a SPAC after leaving CS. Guess what happend.
| Dowwie wrote:
| January 2009 article about bonuses paid during Merrill Lynch's
| lawsuit with shareholders and acquisition by Bank of America:
| https://www.latimes.com/archives/la-xpm-2009-jan-27-fi-thain...
|
| ... also about Thain's 1.2-million USD renovation of his office
| during the Crisis
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