Orcel dodges revolt over pay as he takes helm at UniCredit

In 2020 he further cut his pay by 25% due to the pandemic, waiving also a 2.4 million euro bonus. Investors accounting for 60% of the bank's ordinary share capital were represented at the general meeting, the bank said, so the 54% vote means only around a third of UniCredit's overall capital supports Orcel's pay package.

Andrea Orcel fulfilled his dream of becoming a bank boss on Thursday when UniCredit investors backed the veteran dealmaker as chief executive, but disquiet over his pay, among the highest for a banker in Europe, means his tenure begins on the defensive. Orcel only narrowly defeated a shareholder revolt over the terms and size of his up to 7.5 million euro ($9 million)remuneration package, which secured 54% of votes at the general meeting, just above the required majority threshold.

The package, which is double the pay of former CEO Jean Pierre Mustier, had drawn criticism from leading shareholder advisory firms which had recommended a "no" vote. They were particularly unhappy that the share bonus for the first year was not linked to performance and cannot be recouped in case of misconduct. Thursday's vote compares with a 96% approval rate last year and the 87% investor backing for the remuneration policy Mustier adopted after he arrived in 2016.

The French banker, who steered UniCredit through a tough restructuring, had cut his fixed pay by 40% to 1.2 million euros, waived his yearly bonuses through 2019 and pledged to leave without a severance cheque when the time came. In 2020 he further cut his pay by 25% due to the pandemic, waiving also a 2.4 million euro bonus.

Investors accounting for 60% of the bank's ordinary share capital were represented at the general meeting, the bank said, so the 54% vote means only around a third of UniCredit's overall capital supports Orcel's pay package. Two top 30 UniCredit investors had told Reuters they would vote against, while historic local shareholders such as banking foundations Fondazione CariVerona and Fondazione CRT have openly backed the package. Italian billionaire Leonardo Del Vecchio also voted in favour, a person close to the matter said.

The slate of directors put forward by the outgoing board, comprising Orcel as CEO and former Economy Minister Pier Carlo Padoan as president, got 76.3% of votes, less than half the bank's overall capital. In taking the job at UniCredit, Orcel is relinquishing more than 25 million euros in deferred pay from former employer UBS, whose investment banking arm he led until 2018.

UniCredit has said it will not compensate him in any way for that loss, after a row over pay prompted Spanish bank Santander to withdraw its offer to make Orcel its CEO back in 2019, leaving the Italian banker out of a job. Orcel is suing Santander for 112 million euros. A public hearing in the dispute is scheduled in Madrid on May 19.

($1 = 0.8345 euros) (Additional reporting by Maria Pia Quaglia and Andrea Mandala; editing by Carmel Crimmins, Kirsten Donovan)