Mind the gap: high banker pay no guarantee of success

Fri Mar 31, 2017 6:46am EDT
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By John O'Donnell

FRANKFURT (Reuters) - Some of Europe's most profitable lenders pay their chief executives the least, data from shareholder advisory group ISS shows, while loss-making banks reward their bosses more lavishly.

Despite caps on bank bonuses introduced across much of Europe after the financial crisis, pay still varies widely - sometimes independently of profit - the survey of 11 of Europe's biggest banks, which was compiled by ISS for Reuters, reveals.

The ISS data, which compares CEO pay, pension and benefits in 2016, shows the CEOs of Credit Suisse (CSGN.S: Quote) and Deutsche Bank (DBKGn.DE: Quote) received 7.3 and 4.7 million euros ($5 million) respectively. Both banks made heavy losses last year after big legal penalties relating to their investment banking activities.

At the other end of the spectrum, Jean Laurent Bonnafe, CEO of France's BNP Paribas (BNPP.PA: Quote) and Casper von Koskull of Swedish retail bank Nordea (NDA.ST: Quote) earned less than half as much although their banks recorded profit of 7.7 billion euros and 3.8 billion euros.

The ISS calculations, compiled using company data, may vary from the headline figures highlighted by the banks as is includes cash and benefits actually paid, such as toward a pension.

The contrast revealed in the data comes as Credit Suisse CEO Tidjane Thiam and Deutsche Bank chief John Cryan put their companies' broad policy on executive pay up for approval at shareholder meetings where they face investor unrest.

"Pay tends to be explained as high risk, high reward. But the payouts can remain high, regardless of result," Andrew Gebelin of Glass Lewis, an advisory group influential among investors, told Reuters.

"We would anticipate more controversy over pay at banks in the months ahead. There has been quite a growth in shareholder opposition. It is high on their list of concerns."   Continued...

BNP Paribas Chief Executive Officer Jean-Laurent Bonnafe attends a news conference to present the bank's 2016 annual results in Paris, France, February 7, 2017. REUTERS/Jacky Naegelen