Credit Suisse Group AG investors are being urged to vote against a share-based transformation award for executives and ratifying the actions of the board of directors and management at the upcoming annual general meeting.
(Bloomberg) — Credit Suisse Group AG investors are being urged to vote against a share-based transformation award for executives and ratifying the actions of the board of directors and management at the upcoming annual general meeting.
Proxy advisers Glass Lewis, Institutional Shareholder Services (ISS) and Ethos Foundation are all recommending against the equity-based retention award as well as the discharge of the board and senior management for the fiscal year 2022, according to reports obtained by Bloomberg News.
UBS Group AG agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion) in a historic deal earlier this month after years of scandals, losses and failures in risk control weakened the bank. The government-brokered emergency deal was aimed at putting an end to a crisis of confidence at Credit Suisse that had started to spread across global financial markets.
Credit Suisse declined to comment.
ISS cited the “lack of oversight and poor stewardship” that contributed to the situation where Credit Suisse needed to be taken over to avoid collapse. The bank holds its meeting April 4 in Zurich, the first in-person ones since the pandemic. UBS’s meeting will be the next day.
Separately, Glass Lewis noted the destruction of shareholder value and concerns around deficiencies in risk management and the bank’s structure. It also pointed to the material weaknesses in internal controls over financial reporting, and potential conflicts of interest relating to a transaction with former board member Michael Klein.
Glass Lewis also singled out Credit Suisse board member Mirko Bianchi’s role as head of the board’s audit committee after material weaknesses were discovered in the bank’s financial reporting controls. It also criticized chairman Axel Lehmann for not being more transparent in the roles board members Michael Klein and Blythe Masters played in related party transactions involving The Klein Group LLC and Apollo Global Management.
Ethos, whose 246 pension fund members represent 1.9 million people with 370 billion Swiss francs in assets, is considering the possibility of legal action over the sale – although said that options through the courts are currently limited.
The takeover of Credit Suisse is subject to regulatory approvals and is expected to close by the end of 2023. “We are waiting for final regulatory approvals across the globe so we will complete this deal as quickly as we can,” UBS Chairman Colm Kelleher said last week. “It will be weeks, short months to get this deal effectively closed”.
The deal, brokered by the Swiss authorities, was agreed without the approval of both Credit Suisse and UBS’s shareholders, which is unprecedented. In announcing the takeover, the Swiss government cited an article of its constitution that allows it to issue temporary ordinances “to counter existing or imminent threats of serious disruption to public order or internal or external security”. In this case, this included overriding merger laws on shareholder votes.
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