Credit Suisse Chairman forgoes $1.6 million award, accepts pay cut

The banking industry is currently facing major challenges as several banks are collapsing, and experts warn that the banking crisis is far from over. The ongoing economic uncertainty and market volatility have all contributed to the instability in the banking sector. Several banks around the world, including some of the largest global players, have reported significant losses in recent times.

Credit Suisse is also facing challenges after experiencing its worst financial performance since 2008. In response, the bank's chairman, Axel Lehmann, has given up a $1.6 million award and agreed to a pay cut. 

According to Credit Suisse's compensation report, Axel Lehmann, who began his role as chairman in January last year, is voluntarily forgoing the chair fee of 1.5 million Swiss francs ($1.6 million) that board members are typically awarded on top of their salaries.

The company plans to further reduce Lehmann's salary for 2023-2024 from the earlier estimated amount of 4.5 million Swiss francs to 3.8 million francs. His pay for the current fiscal year (2022-2023) will be 3 million francs, reported Business Insider. 

As per Credit Suisse's annual report published on Tuesday, the bank plans to raise the percentage of Axel Lehmann's salary paid in shares from the current 33% to 50%. The bank had delayed the release of the report for a few days due to queries raised by the Securities and Exchange Commission regarding certain revisions made to the cash flow statements from three years ago.

Credit Suisse, the Swiss banking behemoth, acknowledged that it had discovered significant shortcomings in its financial reporting, according to its annual report. Although it did not clarify if the SEC's queries had been resolved, the bank confirmed that it had "identified material weaknesses" in its internal control over financial reporting for the years 2021 and 2022. 

It further stated that management had failed to develop an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements. "We have identified material weaknesses in our internal control over financial reporting as of December 31, 2022, and 2021. Management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements," the annual report said.

Credit Suisse's internal control weaknesses represent yet another setback for the Swiss bank, whose US-listed shares had fallen by 2.2% to $2.5 at the time of publishing the annual report on Tuesday. Furthermore, Lehmann had come under scrutiny by Swiss regulator FINMA (Swiss Financial Market Supervisory Authority) for potentially misleading statements he made in December regarding the cessation of significant outflows of client funds from the bank, revealed the same report by Business Insider. 

Credit Suisse faced a mass exodus of funds as it battled against growing viral concerns over its financial stability and the risk of a potential collapse similar to that of Lehman Brothers. However, the Swiss regulator, FINMA, announced last week that it had concluded its investigation into the bank's operations and was disclosing its decision due to the significant impact the possibility of the probe had on the market.

"After completing its investigations, it sees no sufficient grounds to open supervisory proceedings. However, it has set out clearly what it expects of the bank regarding its future communications," FINMA reported in the March 10 statement.