The chair of UniCredit applauded the Italian bank’s shareholders for cutting “through the noise” and backing a remuneration package that could push chief executive Andrea Orcel’s pay to €9.75mn.
UniCredit’s remuneration policy won the backing of 70 per cent of the investors who attended the bank’s virtual annual meeting on Friday, ending months of controversy over the proposed pay deal.
The backing from investors, including BlackRock, Allianz and Parvus, comes despite the world’s two largest proxy advisers urging UniCredit shareholders to vote down the plan. Glass Lewis and ISS said that the plan would lead to an excessive increase in Orcel’s pay.
The board increased Orcel’s fixed salary from €2.5mn to €3.25mn. Under the variable part of the plan, which shareholders voted on, his total pay package will hit €9.75mn if targets for this year, including on profits and return on equity, are exceeded. The entire bonus would be paid in deferred shares.
“We are especially pleased to have achieved these results despite the external speculation around this issue,” Pier Carlo Padoan, UniCredit’s chair, said in a statement after the vote. More than 3,600 shareholders joined the meeting remotely.
The pay plan proposed by the board has proven to be a highly sensitive issue at the bank. Orcel’s current remuneration of €7.5mn already makes him one of the best-paid bankers in Europe.
Press reports about board-level conversations around Orcel’s salary requests were followed by an internal investigation into the source of the alleged leaks and ultimately led to the resignation of Dame Jayne-Anne Gadhia, who chaired the remuneration committee, earlier this year.
On Friday, shareholders said they had backed the plan because it is linked to performance targets. “We are all on the same boat,” said Davide Serra, founder and chief executive of Algebris, which is an investor in UniCredit.
UniCredit’s share price has almost doubled since Orcel took over, with profits climbing to €6.5bn last year.
The European Central Bank this week signed off on the bank’s €3.34bn share buyback plan. Together with the newly approved dividend, UniCredit will distribute €5.25bn to investors, a 40 per cent increase on 2021’s levels.
The bank is likely to launch the share buyback as early as this week, according to people familiar with the matter.
“In a very complicated year for financial institutions across the world we have maintained a solid and stable position thanks to which we have ensured sustainable profits to our shareholders,” Padoan told shareholders.
UniCredit opted to revert to the Covid-era format of holding its investor meeting online despite criticism from proxy advisers and some minority shareholders. Earlier this month the Italian government passed a decree offering companies the option of holding the meetings online.
Source: Financial Times