Bonus Dispute: Bad News for Former Credit Suisse Executives
The bonuses for employees from the top three management levels of the former Credit Suisse will not be paid out for now. The Swiss Federal Supreme Court has granted the appeals by the Swiss government and UBS against a Federal Administrative Court ruling suspensive effect.
At the end of March, the Federal Administrative Court (BVGer) had upheld a complaint by twelve affected individuals against the bonus cuts that the Federal Department of Finance (FDF) had ordered as part of the 2023 rescue action for Credit Suisse.
In response, UBS and the Swiss government filed appeals with the Federal Supreme Court. As reported by Swiss news agency «SDA», the court has granted these appeals suspensive effect «for reasons of procedural economy and legal certainty». This is evident from two rulings published by the Federal Supreme Court on Thursday.
Measures in Connection with the Emergency Merger
The legal dispute concerns the measures imposed in March 2023 during the emergency merger of Credit Suisse with UBS. At that time, the Swiss Federal Council instructed the Federal Department of Finance (FDF) via emergency ordinance to impose measures regarding compensation in accordance with Article 10a of the Banking Act.
As a result, the FDF ordered on 23 May 2023 that Credit Suisse must reduce or cancel outstanding bonus payments across the group: for the top management level (Executive Board), bonuses were to be canceled entirely; for the level directly below, cut by 50 percent; and for the second level below the Executive Board, reduced by 25 percent.
According to the ruling by the Federal Administrative Court, there was no legal basis for this order. The bonuses were contractually agreed compensation based on employment contracts.
A Matter of Employment or Civil Law
The Federal Supreme Court also stated in its rulings that the bonus cuts fall under employment or civil law and therefore fall within the jurisdiction of civil or potentially arbitration courts. It further emphasized that the decision on the legality of the FDF’s order could clearly influence the outcome of these proceedings.
If suspensive effect were not granted, contradictory rulings could result.
