Credit Suisse Risk Chair Steps Down in Face of Shareholder Opposition
Shareholders in Credit Suisse have finally said enough is enough, resulting in the sudden departure of risk committee chair Andreas Gottschling on the morning of the 2021 AGM. Mr. Gottschling, who joined the board in 2017 and had chaired the risk committee since 2018, chose not to seek re-election in the face of a reported lack of support.
After what have probably been some of the worst risk oversight failures at a major global bank in the past decade, the company is currently implementing risk reduction measures required by Swiss financial regulator FINMA. FINMA began enforcement proceedings against the bank last month as a result of its multi-billion-dollar exposure to the now collapsed Greensill Capital and Archegos Capital funds.
This is only the latest addition to Credit Suisse’s oversight woes, which in recent years have caused the departure of one executive after another. In 2020 alone, the company was plagued by revelations of internal spying and a court ruling that opened the door for customers de-frauded by a former employee to seek $1 billion in compensation.
As scandals and oversight failures piled up over the past five years, Glass Lewis has consistently expressed concern about the bank’s board oversight, advising shareholders not to support the re-election of certain directors (2018, 2021), various pay proposals (2017, 2019, 2020) or the ratification of board and management acts (2016, 2017, 2020). During that time, Credit Suisse had a few close calls on compensation votes which ultimately passed by relatively slim majorities. Certainly, shareholder input was factored into revised compensation plans as well as several strategic hiring, firing, and restructuring decisions. However, for the most part, the company avoided any direct censure by shareholders until Mr. Gottschling’s resignation.
After losing the support of large shareholders including Harris Associates and Norges Bank Investment Management, Gottschling was spared the scrutiny of the AGM on 30 April. We may never know how many shareholders would ultimately have voted against his re-election, absent any tally of votes that had already been cast before he withdrew. Nonetheless, investors will need to keep a close eye on the outcome of the FINMA proceedings against Credit Suisse to see if Mr Gottschling is cleared. In two weeks, shareholders will decide if he should be trusted with risk oversight at another major financial institution—Deutsche Börse—where he is also up for re-election to head the risk committee.