The Bundesgericht confirms that the cancellation of bonuses for CS cadres was lawful

The Swiss Federal Supreme Court has confirmed that the cancellation of bonuses for top executives at Credit Suisse was lawful. This decision upholds the earlier ruling by the federal administration, which had ordered the reduction or elimination of bonuses for the highest three levels of management at the bank following its takeover by UBS with government support in March 2023. Between 2012 and 2022, the variable compensation of Credit Suisse managers totaled 31.7 billion Swiss francs, while the bank's annual results showed a total loss of 32.3 billion francs during the same period. A dozen former CS managers challenged the bonus cuts through legal means, arguing that their bonuses were guaranteed under employment contracts and that their removal constituted an excessive interference with property rights. The Federal Administrative Court initially supported this view, stating there was no legal basis for the Federal Department of Finance’s (EFD) directive. However, the EFD and UBS appealed, and the Federal Supreme Court ruled in favor of the appeal. It cited provisions in the Banking Act allowing the federal government to impose measures on remuneration if state aid is granted to a systemically important bank. According to the court, variable compensation for past periods contributing to the need for state assistance should not be funded by public money. The court emphasized that poor performance should not result in rewards, noting that Credit Suisse’s management failed to prevent the bank’s collapse.