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UniCredit investors urged to protest over pay for new chief Andrea Orcel

An influential shareholder advisory group has urged investors to vote against UniCredit’s pay policy at the bank’s annual meeting in two weeks, in protest at new chief executive Andrea Orcel’s potential €7.5m package.

Glass Lewis said it is “concerned by the structure of the CEO’s remuneration package, which comprises an equity award not linked to performance and not subject to recovery provisions”. 

“Our concerns are compounded by the absence of any disclosure regarding the quantum of the CEO’s remuneration,” it added in a report on Monday. It also questioned why Orcel’s pay was higher than his predecessor and criticised “poor disclosure of key features of the remuneration structure for the CEO, which we believe lags behind market best practice”.

The Financial Times has reported that Orcel will earn a salary of €2.5m and be awarded as much as €5m in company stock in 2021, unlinked to his or the company’s performance. The total annual pay of €7.5m would make him Italy’s highest-paid banker and is among the most generous in Europe.

The only information published by UniCredit ahead of the AGM shows the CEO’s additional “variable” pay could be a maximum of 200 per cent of his annual salary. Full details will not be made available until next year.

Orcel, the 57-year-old Italian former head of UBS’s investment bank, has become one of Europe’s best-known bankers after intense scrutiny of his pay during an ill-fated attempt to become chief executive of Santander in 2018.

His proposed move collapsed in a dispute with Santander chair, Ana Botín, over his €50m sign-on package and their respective public profiles. Orcel later filed a €112m lawsuit against Santander over the withdrawn job offer, with the first hearing due to take place in Madrid on April 7. 

UniCredit has maintained that the matter is personal and it will not effect Orcel’s job or the bank’s relationship with the Santander. However, several shareholders of the Italian bank have privately expressed concerns about the potential reputational impact of the court case.

Explaining Orcel’s pay package, UniCredit has said: “In order to align the shareholders and the CEO’s interests, the board has approved from the first year of the CEO’s term an equity award that amounts to the whole variable compensation for 2021 payable in two tranches and without any performance condition, malus or clawback.”

The bank added that from 2022, Orcel’s remuneration will be based on performance and that unlike Santander’s withdrawn offer, “does not include [compensation for] the reduction or cancellation of outstanding pay from previous jobs”.

When taking the UniCredit job, Orcel forfeited tens of millions in deferred pay still owed to him by UBS because of rules about joining a competitor.

Jean Pierre Mustier, who stepped down as CEO of UniCredit in February, cut his fixed pay by 40 per cent to €1.2m when he joined in 2016. Last year, he also voluntarily reduced his salary by a quarter in response to the pandemic and gave up €2.4m in bonuses.

UniCredit was not immediately able to comment on behalf of the company or Orcel.


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