Credit Suisse announces a new bonus payout plan

Credit Suisse Group (CS) Tuesday introduced a new bonus payout plan for its top executives, including more closely linking awards to the bank's overall profitability.

The Zurich-based bank will award a greater portion of pay as fixed salary as opposed to bonus. It will also put tighter limits on stock-based bonus pay by extending the vesting period to four years from three and by linking their value to the bank's return on equity. Previously, the value was linked primarily to Credit Suisse's share price. The instruments are awarded to about 7,000 Credit Suisse directors and managing directors.

Another cash-based instrument will adjust in value depending on Credit Suisse's return on equity over three years, with the potential to lower the award should the employee's business area be loss-making.

Credit Suisse also said it will introduce minimum holdings in its own stock for its highest management.

Credit Suisse said the compensation changes are part of a raft of other measures during the financial crisis.

"These measures include making adjustments to our business strategy, significantly reducing our risk exposures, including introducing a reduced-risk, capital-efficient business model in the investment bank, and strengthening our capital base," Credit Suisse Chief Executive Brady Dougan said in a statement.

The changes are effective for bonuses paid out in spring for the 2009 financial year, and come against a backdrop of intense pressure on banker pay.

The Obama administration has installed a pay czar to vet compensation at seven firms receiving significant government aid, and the U.K. recently agreed to tighter controls on bonuses laid out by the Group of 20.

In Switzerland, a government shore-up of UBS AG (UBS) has prompted the financial regulator to heighten scrutiny on pay, although plans are still in consultation.

Credit Suisse said that "the new structure and the new vehicles are consistent with the guidelines for best compensation practices that were announced at the G-20 summit and reaffirm the bank's commitment to fair, balanced and performance-oriented compensation policies that align long-term employee and shareholder interests."