UniCredit seeks pay improve for Andrea Orcel to maintain CEO blissful

UniCredit is in search of to spice up the pay of chief government Andrea Orcel after he advised colleagues he desires an even bigger reward for turning around the Italian financial institution, in line with folks accustomed to the matter.

Milan-based UniCredit is attempting to reconcile the expectations of shareholders and Orcel, a star funding banker whose pay calls for have beforehand brought on controversy.

Orcel was awarded €51.4mn in compensation in January this yr after suing Santander for withdrawing a 2018 provide for him to grow to be chief government. The Spanish financial institution had second ideas over the appointment due to Orcel’s pay calls for to maneuver from UBS.

Orcel’s whole remuneration at UniCredit was €6.7mn final yr, together with a €4.8mn sign-on bonus, one of many highest packages in Europe and greater than double that of his predecessor Jean Pierre Mustier.

However Orcel’s supporters say he needs to be paid extra like Jamie Dimon, the JPMorgan Chase boss, who acquired $34.5mn final yr. They level to UniCredit’s superior share worth efficiency and the cash from UBS that Orcel sacrificed after returning to the workforce following his departure from the Swiss financial institution.

At UniCredit, Orcel’s pay expectations have concerned the human sources staff and exterior advisers who will probably be tasked with shareholder outreach, stated one individual near the matter. The difficulty is “extraordinarily delicate”, the individual stated.

One other individual accustomed to the matter stated: “He is aware of how a lot he’s value,” including the CEO’s remuneration was “undoubtedly a difficulty”.

Underneath EU guidelines, Orcel’s bonus is capped at two instances his mounted pay of €2.5mn. A 3rd individual accustomed to the matter stated: “Andrea all the time most popular the next [bonus target] and better carrot to be extra aligned with shareholders.”

One other individual stated Orcel want to double his mounted pay to permit for the next bonus if he met extra stretching targets.

UniCredit has not too long ago begun a spherical of shareholder conferences forward of the annual basic assembly within the spring. On the 2021 AGM, UniCredit solely narrowly received investor assist for his pay, with 42.7 per cent of them, together with the single-largest investor BlackRock, voting towards the group’s remuneration coverage.

Nonetheless, the assist grew in 2022 and a few shareholders are in favour of boosting the chief government’s pay, particularly in mild of the superior efficiency of the financial institution’s inventory in contrast with friends.

UniCredit shares are up greater than 45 per cent since Orcel turned chief government final April, outperforming most European rivals.

The financial institution’s hard-charging CEO has made returning €16bn of capital to shareholders by 2024 a key pillar of the brand new technique he introduced final December. It’s on observe to distribute €3.75bn through dividends and purchases of its personal shares this yr, elevating alarm bells on the European Central Financial institution which has pushed for extra warning.

“At no level has Mr Orcel made any request to the board or remuneration committee with regard to growing his compensation,” UniCredit chair Pietro Carlo Padoan advised the Monetary Occasions in an announcement, including that “remuneration for the CEO is completely the remit of the RemCo which makes a suggestion to the board incorporating views of buyers and wider stakeholders. CEO pay is reviewed yearly, this has been the conventional course of occasions for over a decade.”